Correlation Between Aberdeen Global and Miller/howard High

Can any of the company-specific risk be diversified away by investing in both Aberdeen Global and Miller/howard High 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 Miller/howard High 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 Millerhoward High Income, you can compare the effects of market volatilities on Aberdeen Global and Miller/howard High 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 Miller/howard High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Global and Miller/howard High.

Diversification Opportunities for Aberdeen Global and Miller/howard High

0.8

Correlation Coefficient

Aberdeen Global  Miller/howard High

Very poor diversification

The 3 months correlation between Aberdeen and Miller/howard is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Global IF and Millerhoward High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millerhoward High Income 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 Miller/howard High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millerhoward High Income has no effect on the direction of Aberdeen Global i.e., Aberdeen Global and Miller/howard High go up and down completely randomly.

Pair Corralation between Aberdeen Global and Miller/howard High

Considering the 90-day investment horizon Aberdeen Global is expected to generate 1.03 times less return on investment than Miller/howard High. In addition to that, Aberdeen Global is 1.66 times more volatile than Millerhoward High Income. It trades about 0.1 of its total potential returns per unit of risk. Millerhoward High Income is currently generating about 0.18 per unit of volatility. If you would invest  1,180  in Millerhoward High Income on August 31, 2024 and sell it today you would earn a total of  76.00  from holding Millerhoward High Income or generate 6.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	92.06%
Values	Daily Returns

Aberdeen Global IF  vs.  Millerhoward High Income

Aberdeen Global IF

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Global IF are ranked lower than 8 (%) 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 December 2024.

Millerhoward High Income

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Millerhoward High Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather weak forward indicators, Miller/howard High may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Aberdeen Global and Miller/howard High

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

The idea behind Aberdeen Global IF and Millerhoward High Income 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.