Correlation Between Canadian General and Aberdeen Diversified

Can any of the company-specific risk be diversified away by investing in both Canadian General and Aberdeen Diversified at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Canadian General and Aberdeen Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Canadian General Investments and Aberdeen Diversified Income, you can compare the effects of market volatilities on Canadian General and Aberdeen Diversified and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Canadian General with a short position of Aberdeen Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian General and Aberdeen Diversified.

Diversification Opportunities for Canadian General and Aberdeen Diversified

-0.74

Correlation Coefficient

Canadian General  Aberdeen Diversified

Pay attention - limited upside

The 3 months correlation between Canadian and Aberdeen is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Canadian General Investments and Aberdeen Diversified Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Diversified and Canadian General is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Canadian General Investments are associated (or correlated) with Aberdeen Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Diversified has no effect on the direction of Canadian General i.e., Canadian General and Aberdeen Diversified go up and down completely randomly.

Pair Corralation between Canadian General and Aberdeen Diversified

Assuming the 90 days trading horizon Canadian General Investments is expected to under-perform the Aberdeen Diversified. In addition to that, Canadian General is 1.44 times more volatile than Aberdeen Diversified Income. It trades about -0.09 of its total potential returns per unit of risk. Aberdeen Diversified Income is currently generating about 0.17 per unit of volatility. If you would invest  4,300  in Aberdeen Diversified Income on December 25, 2024 and sell it today you would earn a total of  580.00  from holding Aberdeen Diversified Income or generate 13.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Canadian General Investments  vs.  Aberdeen Diversified Income

Canadian General Inv

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canadian General Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Aberdeen Diversified

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Diversified Income are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Aberdeen Diversified unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canadian General and Aberdeen Diversified

The main advantage of trading using opposite Canadian General and Aberdeen Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian General position performs unexpectedly, Aberdeen Diversified can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Aberdeen Diversified will offset losses from the drop in Aberdeen Diversified's long position.

The idea behind Canadian General Investments and Aberdeen Diversified Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.