Correlation Between Aberdeen Tax-free and Guidepath(r) Managed

Can any of the company-specific risk be diversified away by investing in both Aberdeen Tax-free and Guidepath(r) Managed 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 Tax-free and Guidepath(r) Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aberdeen Tax Free Incm and Guidepath Managed Futures, you can compare the effects of market volatilities on Aberdeen Tax-free and Guidepath(r) Managed 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 Tax-free with a short position of Guidepath(r) Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Tax-free and Guidepath(r) Managed.

Diversification Opportunities for Aberdeen Tax-free and Guidepath(r) Managed

-0.56

Correlation Coefficient

Aberdeen Tax-free  Guidepath(r) Managed

Excellent diversification

The 3 months correlation between Aberdeen and Guidepath(r) is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Tax Free Incm and Guidepath Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidepath Managed Futures and Aberdeen Tax-free 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 Tax Free Incm are associated (or correlated) with Guidepath(r) Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidepath Managed Futures has no effect on the direction of Aberdeen Tax-free i.e., Aberdeen Tax-free and Guidepath(r) Managed go up and down completely randomly.

Pair Corralation between Aberdeen Tax-free and Guidepath(r) Managed

Assuming the 90 days horizon Aberdeen Tax Free Incm is expected to generate 0.34 times more return on investment than Guidepath(r) Managed. However, Aberdeen Tax Free Incm is 2.98 times less risky than Guidepath(r) Managed. It trades about -0.04 of its potential returns per unit of risk. Guidepath Managed Futures is currently generating about -0.06 per unit of risk. If you would invest  899.00  in Aberdeen Tax Free Incm on December 4, 2024 and sell it today you would lose (5.00) from holding Aberdeen Tax Free Incm or give up 0.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Aberdeen Tax Free Incm  vs.  Guidepath Managed Futures

Aberdeen Tax Free

Risk-Adjusted Performance

Very Weak

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

Guidepath Managed Futures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guidepath Managed Futures has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Guidepath(r) Managed 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 Tax-free and Guidepath(r) Managed

The main advantage of trading using opposite Aberdeen Tax-free and Guidepath(r) Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Tax-free position performs unexpectedly, Guidepath(r) Managed 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 Guidepath(r) Managed will offset losses from the drop in Guidepath(r) Managed's long position.

The idea behind Aberdeen Tax Free Incm and Guidepath Managed Futures 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.