Correlation Between Heartland Value and Aberdeen Select

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

By analyzing existing cross correlation between Heartland Value Plus and Aberdeen Select International, you can compare the effects of market volatilities on Heartland Value and Aberdeen Select 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 Heartland Value with a short position of Aberdeen Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heartland Value and Aberdeen Select.

Diversification Opportunities for Heartland Value and Aberdeen Select

-0.38

Correlation Coefficient

Heartland Value  Aberdeen Select

Very good diversification

The 3 months correlation between Heartland and Aberdeen is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Value Plus and Aberdeen Select International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Select Inte and Heartland Value 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 Heartland Value Plus are associated (or correlated) with Aberdeen Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Select Inte has no effect on the direction of Heartland Value i.e., Heartland Value and Aberdeen Select go up and down completely randomly.

Pair Corralation between Heartland Value and Aberdeen Select

Assuming the 90 days horizon Heartland Value Plus is expected to under-perform the Aberdeen Select. In addition to that, Heartland Value is 1.46 times more volatile than Aberdeen Select International. It trades about -0.11 of its total potential returns per unit of risk. Aberdeen Select International is currently generating about 0.1 per unit of volatility. If you would invest  2,905  in Aberdeen Select International on December 23, 2024 and sell it today you would earn a total of  90.00  from holding Aberdeen Select International or generate 3.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	63.93%
Values	Daily Returns

Heartland Value Plus  vs.  Aberdeen Select International

Heartland Value Plus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Heartland Value Plus has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Aberdeen Select Inte

Risk-Adjusted Performance

OK

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

Pair Trading with Heartland Value and Aberdeen Select

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

The idea behind Heartland Value Plus and Aberdeen Select International 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.