Correlation Between Aberdeen Asia-pacific and Clearbridge Energy

Can any of the company-specific risk be diversified away by investing in both Aberdeen Asia-pacific and Clearbridge Energy 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 Asia-pacific and Clearbridge Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aberdeen Asia Pacific If and Clearbridge Energy Mlp, you can compare the effects of market volatilities on Aberdeen Asia-pacific and Clearbridge Energy 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 Asia-pacific with a short position of Clearbridge Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Asia-pacific and Clearbridge Energy.

Diversification Opportunities for Aberdeen Asia-pacific and Clearbridge Energy

-0.13

Correlation Coefficient

Aberdeen Asia-pacific  Clearbridge Energy

Good diversification

The 3 months correlation between Aberdeen and Clearbridge is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Asia Pacific If and Clearbridge Energy Mlp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Energy Mlp and Aberdeen Asia-pacific 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 Asia Pacific If are associated (or correlated) with Clearbridge Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Energy Mlp has no effect on the direction of Aberdeen Asia-pacific i.e., Aberdeen Asia-pacific and Clearbridge Energy go up and down completely randomly.

Pair Corralation between Aberdeen Asia-pacific and Clearbridge Energy

Considering the 90-day investment horizon Aberdeen Asia Pacific If is expected to under-perform the Clearbridge Energy. But the fund apears to be less risky and, when comparing its historical volatility, Aberdeen Asia Pacific If is 461.41 times less risky than Clearbridge Energy. The fund trades about -0.05 of its potential returns per unit of risk. The Clearbridge Energy Mlp is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Clearbridge Energy Mlp on August 31, 2024 and sell it today you would earn a total of  3.00  from holding Clearbridge Energy Mlp or generate 17.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	10.94%
Values	Daily Returns

Aberdeen Asia Pacific If  vs.  Clearbridge Energy Mlp

Aberdeen Asia Pacific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aberdeen Asia Pacific If has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Aberdeen Asia-pacific is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Clearbridge Energy Mlp

Risk-Adjusted Performance

0 of 100

Strong

Over the last 90 days Clearbridge Energy Mlp has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively weak basic indicators, Clearbridge Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aberdeen Asia-pacific and Clearbridge Energy

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

The idea behind Aberdeen Asia Pacific If and Clearbridge Energy Mlp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..