Correlation Between Ford and Aberdeen Diversified
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and Aberdeen Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Aberdeen Diversified Income, you can compare the effects of market volatilities on Ford 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 Ford with a short position of Aberdeen Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Aberdeen Diversified.
Diversification Opportunities for Ford and Aberdeen Diversified
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Aberdeen is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Aberdeen Diversified Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Diversified and Ford 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 Ford Motor 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 Ford i.e., Ford and Aberdeen Diversified go up and down completely randomly.
Pair Corralation between Ford and Aberdeen Diversified
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Aberdeen Diversified. In addition to that, Ford is 1.41 times more volatile than Aberdeen Diversified Income. It trades about -0.01 of its total potential returns per unit of risk. Aberdeen Diversified Income is currently generating about 0.02 per unit of volatility. If you would invest 3,940 in Aberdeen Diversified Income on September 12, 2024 and sell it today you would earn a total of 360.00 from holding Aberdeen Diversified Income or generate 9.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.15% |
Values | Daily Returns |
Ford Motor vs. Aberdeen Diversified Income
Performance |
Timeline |
Ford Motor |
Aberdeen Diversified |
Ford and Aberdeen Diversified Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ford and Aberdeen Diversified
The main advantage of trading using opposite Ford and Aberdeen Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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 Ford Motor 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.Aberdeen Diversified vs. Future Metals NL | Aberdeen Diversified vs. Automatic Data Processing | Aberdeen Diversified vs. Empire Metals Limited | Aberdeen Diversified vs. Air Products Chemicals |
Check out your portfolio center.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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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