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

0.68

Correlation Coefficient

FirstCash  Aberdeen Global

Poor diversification

The 3 months correlation between FirstCash and Aberdeen is 0.68. 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 1.25 times more return on investment than Aberdeen Global. However, FirstCash is 1.25 times more volatile than Aberdeen Global IF. It trades about 0.07 of its potential returns per unit of risk. Aberdeen Global IF is currently generating about 0.07 per unit of risk. If you would invest  10,676  in FirstCash on December 2, 2024 and sell it today you would earn a total of  552.00  from holding FirstCash or generate 5.17% 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

FirstCash

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FirstCash are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, FirstCash is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Aberdeen Global IF

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Global IF are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Aberdeen Global is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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.

The idea behind FirstCash and Aberdeen Global IF 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.