Correlation Between Aberdeen Gbl and Aberdeen Short

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

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

Diversification Opportunities for Aberdeen Gbl and Aberdeen Short

-0.49

Correlation Coefficient

Aberdeen Gbl  Aberdeen Short

Very good diversification

The 3 months correlation between Aberdeen and Aberdeen is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Gbl Eq and Aberdeen Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Short Duration and Aberdeen Gbl 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 Gbl Eq are associated (or correlated) with Aberdeen Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Short Duration has no effect on the direction of Aberdeen Gbl i.e., Aberdeen Gbl and Aberdeen Short go up and down completely randomly.

Pair Corralation between Aberdeen Gbl and Aberdeen Short

Assuming the 90 days horizon Aberdeen Gbl Eq is expected to under-perform the Aberdeen Short. In addition to that, Aberdeen Gbl is 5.36 times more volatile than Aberdeen Short Duration. It trades about -0.06 of its total potential returns per unit of risk. Aberdeen Short Duration is currently generating about 0.03 per unit of volatility. If you would invest  908.00  in Aberdeen Short Duration on December 30, 2024 and sell it today you would earn a total of  3.00  from holding Aberdeen Short Duration or generate 0.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Aberdeen Gbl Eq  vs.  Aberdeen Short Duration

Aberdeen Gbl Eq

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aberdeen Gbl Eq has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Aberdeen Gbl is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aberdeen Short Duration

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Short Duration are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Aberdeen Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aberdeen Gbl and Aberdeen Short

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

The idea behind Aberdeen Gbl Eq and Aberdeen Short Duration 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 Anywhere module to track or share privately all of your investments from the convenience of any device.