Correlation Between Highland Floating and Aberdeen Total

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

By analyzing existing cross correlation between Highland Floating Rate and Aberdeen Total Dynamic, you can compare the effects of market volatilities on Highland Floating and Aberdeen Total 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 Highland Floating with a short position of Aberdeen Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Floating and Aberdeen Total.

Diversification Opportunities for Highland Floating and Aberdeen Total

0.43

Correlation Coefficient

Highland Floating  Aberdeen Total

Very weak diversification

The 3 months correlation between Highland and Aberdeen is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Highland Floating Rate and Aberdeen Total Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Total Dynamic and Highland Floating 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 Highland Floating Rate are associated (or correlated) with Aberdeen Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Total Dynamic has no effect on the direction of Highland Floating i.e., Highland Floating and Aberdeen Total go up and down completely randomly.

Pair Corralation between Highland Floating and Aberdeen Total

Given the investment horizon of 90 days Highland Floating Rate is expected to under-perform the Aberdeen Total. In addition to that, Highland Floating is 1.43 times more volatile than Aberdeen Total Dynamic. It trades about -0.34 of its total potential returns per unit of risk. Aberdeen Total Dynamic is currently generating about -0.12 per unit of volatility. If you would invest  863.00  in Aberdeen Total Dynamic on October 5, 2024 and sell it today you would lose (18.00) from holding Aberdeen Total Dynamic or give up 2.09% of portfolio value over 90 days.

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

Highland Floating Rate  vs.  Aberdeen Total Dynamic

Highland Floating Rate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Highland Floating Rate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fragile performance in the last few months, the Fund's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the fund investors.

Aberdeen Total Dynamic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aberdeen Total Dynamic has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound basic indicators, Aberdeen Total is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Highland Floating and Aberdeen Total

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

The idea behind Highland Floating Rate and Aberdeen Total Dynamic 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.