Correlation Between FirstCash and Aberdeen Global
Can any of the company-specific risk be diversified away by investing in both FirstCash and Aberdeen Global 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 FirstCash and Aberdeen Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FirstCash and Aberdeen Global IF, you can compare the effects of market volatilities on FirstCash and Aberdeen Global 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 FirstCash with a short position of Aberdeen Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of FirstCash and Aberdeen Global.
Diversification Opportunities for FirstCash and Aberdeen Global
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FirstCash and Aberdeen is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding FirstCash and Aberdeen Global IF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Global IF and FirstCash 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 FirstCash are associated (or correlated) with Aberdeen Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Global IF has no effect on the direction of FirstCash i.e., FirstCash and Aberdeen Global go up and down completely randomly.
Pair Corralation between FirstCash and Aberdeen Global
Given the investment horizon of 90 days FirstCash is expected to generate 1.22 times more return on investment than Aberdeen Global. However, FirstCash is 1.22 times more volatile than Aberdeen Global IF. It trades about 0.21 of its potential returns per unit of risk. Aberdeen Global IF is currently generating about 0.11 per unit of risk. If you would invest 10,262 in FirstCash on December 29, 2024 and sell it today you would earn a total of 1,753 from holding FirstCash or generate 17.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
FirstCash vs. Aberdeen Global IF
Performance |
Timeline |
FirstCash |
Aberdeen Global IF |
FirstCash and Aberdeen Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with FirstCash and Aberdeen Global
The main advantage of trading using opposite FirstCash and Aberdeen Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FirstCash position performs unexpectedly, Aberdeen Global 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 Global will offset losses from the drop in Aberdeen Global's long position.FirstCash vs. World Acceptance | FirstCash vs. Enova International | FirstCash vs. Green Dot | FirstCash vs. Medallion Financial Corp |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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