Correlation Between Urbana and Standard Life

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

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

Diversification Opportunities for Urbana and Standard Life

-0.5

Correlation Coefficient

Urbana  Standard Life

Very good diversification

The 3 months correlation between Urbana and Standard is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Urbana and Standard Life Aberdeen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Life Aberdeen and Urbana 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 Urbana are associated (or correlated) with Standard Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Life Aberdeen has no effect on the direction of Urbana i.e., Urbana and Standard Life go up and down completely randomly.

Pair Corralation between Urbana and Standard Life

Assuming the 90 days horizon Urbana is expected to generate 1.08 times more return on investment than Standard Life. However, Urbana is 1.08 times more volatile than Standard Life Aberdeen. It trades about 0.14 of its potential returns per unit of risk. Standard Life Aberdeen is currently generating about 0.08 per unit of risk. If you would invest  395.00  in Urbana on October 26, 2024 and sell it today you would earn a total of  32.00  from holding Urbana or generate 8.1% return on investment over 90 days.

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

Urbana  vs.  Standard Life Aberdeen

Urbana

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Urbana are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Urbana may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Standard Life Aberdeen

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Standard Life Aberdeen are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Standard Life is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Urbana and Standard Life

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

The idea behind Urbana and Standard Life Aberdeen 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 CEOs Directory module to screen CEOs from public companies around the world.