Correlation Between Aberdeen Gbl and Dreyfus/standish

Can any of the company-specific risk be diversified away by investing in both Aberdeen Gbl and Dreyfus/standish 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 Aberdeen Gbl and Dreyfus/standish into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aberdeen Gbl Small and Dreyfusstandish Global Fixed, you can compare the effects of market volatilities on Aberdeen Gbl and Dreyfus/standish 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 Aberdeen Gbl with a short position of Dreyfus/standish. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Gbl and Dreyfus/standish.

Diversification Opportunities for Aberdeen Gbl and Dreyfus/standish

0.62

Correlation Coefficient

Aberdeen Gbl  Dreyfus/standish

Poor diversification

The 3 months correlation between Aberdeen and Dreyfus/standish is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Gbl Small and Dreyfusstandish Global Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfusstandish Global and Aberdeen Gbl 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 Aberdeen Gbl Small are associated (or correlated) with Dreyfus/standish. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfusstandish Global has no effect on the direction of Aberdeen Gbl i.e., Aberdeen Gbl and Dreyfus/standish go up and down completely randomly.

Pair Corralation between Aberdeen Gbl and Dreyfus/standish

Assuming the 90 days horizon Aberdeen Gbl Small is expected to generate 4.25 times more return on investment than Dreyfus/standish. However, Aberdeen Gbl is 4.25 times more volatile than Dreyfusstandish Global Fixed. It trades about 0.02 of its potential returns per unit of risk. Dreyfusstandish Global Fixed is currently generating about 0.06 per unit of risk. If you would invest  2,584  in Aberdeen Gbl Small on December 30, 2024 and sell it today you would earn a total of  23.00  from holding Aberdeen Gbl Small or generate 0.89% return on investment over 90 days.

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

Aberdeen Gbl Small  vs.  Dreyfusstandish Global Fixed

Aberdeen Gbl Small

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Gbl Small are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Aberdeen Gbl is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dreyfusstandish Global

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfusstandish Global Fixed are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Dreyfus/standish is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aberdeen Gbl and Dreyfus/standish

The main advantage of trading using opposite Aberdeen Gbl and Dreyfus/standish positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Gbl position performs unexpectedly, Dreyfus/standish 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 Dreyfus/standish will offset losses from the drop in Dreyfus/standish's long position.

The idea behind Aberdeen Gbl Small and Dreyfusstandish Global Fixed 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.