Correlation Between Western Asset and Aberdeen Global

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

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

Diversification Opportunities for Western Asset and Aberdeen Global

0.47

Correlation Coefficient

Western Asset  Aberdeen Global

Very weak diversification

The 3 months correlation between Western and Aberdeen is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High 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 Western Asset 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 Western Asset High 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 Western Asset i.e., Western Asset and Aberdeen Global go up and down completely randomly.

Pair Corralation between Western Asset and Aberdeen Global

Considering the 90-day investment horizon Western Asset High is expected to under-perform the Aberdeen Global. In addition to that, Western Asset is 1.03 times more volatile than Aberdeen Global IF. It trades about -0.01 of its total potential returns per unit of risk. Aberdeen Global IF is currently generating about -0.01 per unit of volatility. If you would invest  593.00  in Aberdeen Global IF on September 19, 2024 and sell it today you would lose (1.00) from holding Aberdeen Global IF or give up 0.17% of portfolio value over 90 days.

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

Western Asset High  vs.  Aberdeen Global IF

Western Asset High

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aberdeen Global IF

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Global IF are ranked lower than 3 (%) 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 latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Western Asset and Aberdeen Global

The main advantage of trading using opposite Western Asset and Aberdeen Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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 Western Asset High 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.

Check out your portfolio center.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.