Correlation Between Aberdeen Global and Clough Global

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

By analyzing existing cross correlation between Aberdeen Global IF and Clough Global Allocation, you can compare the effects of market volatilities on Aberdeen Global and Clough 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 Aberdeen Global with a short position of Clough Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Global and Clough Global.

Diversification Opportunities for Aberdeen Global and Clough Global

0.77

Correlation Coefficient

Aberdeen Global  Clough Global

Poor diversification

The 3 months correlation between Aberdeen and Clough is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Global IF and Clough Global Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clough Global Allocation and Aberdeen Global 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 Global IF are associated (or correlated) with Clough Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clough Global Allocation has no effect on the direction of Aberdeen Global i.e., Aberdeen Global and Clough Global go up and down completely randomly.

Pair Corralation between Aberdeen Global and Clough Global

Considering the 90-day investment horizon Aberdeen Global IF is expected to generate 1.17 times more return on investment than Clough Global. However, Aberdeen Global is 1.17 times more volatile than Clough Global Allocation. It trades about 0.1 of its potential returns per unit of risk. Clough Global Allocation is currently generating about 0.05 per unit of risk. If you would invest  560.00  in Aberdeen Global IF on September 3, 2024 and sell it today you would earn a total of  36.00  from holding Aberdeen Global IF or generate 6.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Aberdeen Global IF  vs.  Clough Global Allocation

Aberdeen Global IF

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Global IF are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Aberdeen Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Clough Global Allocation

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Clough Global Allocation are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly stable essential indicators, Clough Global is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Aberdeen Global and Clough Global

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

The idea behind Aberdeen Global IF and Clough Global Allocation 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.