Correlation Between Aberdeen Asia and Nuveen Mortgage

Can any of the company-specific risk be diversified away by investing in both Aberdeen Asia and Nuveen Mortgage 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 and Nuveen Mortgage 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 Nuveen Mortgage Opportunity, you can compare the effects of market volatilities on Aberdeen Asia and Nuveen Mortgage 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 with a short position of Nuveen Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Asia and Nuveen Mortgage.

Diversification Opportunities for Aberdeen Asia and Nuveen Mortgage

0.91

Correlation Coefficient

Aberdeen Asia  Nuveen Mortgage

Almost no diversification

The 3 months correlation between Aberdeen and Nuveen is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Asia Pacific If and Nuveen Mortgage Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Mortgage Oppo and Aberdeen Asia 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 Nuveen Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Mortgage Oppo has no effect on the direction of Aberdeen Asia i.e., Aberdeen Asia and Nuveen Mortgage go up and down completely randomly.

Pair Corralation between Aberdeen Asia and Nuveen Mortgage

Considering the 90-day investment horizon Aberdeen Asia Pacific If is expected to generate 1.21 times more return on investment than Nuveen Mortgage. However, Aberdeen Asia is 1.21 times more volatile than Nuveen Mortgage Opportunity. It trades about 0.27 of its potential returns per unit of risk. Nuveen Mortgage Opportunity is currently generating about 0.22 per unit of risk. If you would invest  1,428  in Aberdeen Asia Pacific If on December 28, 2024 and sell it today you would earn a total of  136.00  from holding Aberdeen Asia Pacific If or generate 9.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

Aberdeen Asia Pacific If  vs.  Nuveen Mortgage Opportunity

Aberdeen Asia Pacific

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Asia Pacific If are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly fragile basic indicators, Aberdeen Asia may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Nuveen Mortgage Oppo

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Mortgage Opportunity are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent essential indicators, Nuveen Mortgage may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Aberdeen Asia and Nuveen Mortgage

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

The idea behind Aberdeen Asia Pacific If and Nuveen Mortgage Opportunity 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.