Correlation Between Vanguard Total and Aberdeen Asia

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

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

Diversification Opportunities for Vanguard Total and Aberdeen Asia

-0.83

Correlation Coefficient

Vanguard Total  Aberdeen Asia

Pay attention - limited upside

The 3 months correlation between Vanguard and Aberdeen is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and Aberdeen Asia Pacificome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Asia Pacificome and Vanguard Total 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 Vanguard Total Stock are associated (or correlated) with Aberdeen Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Asia Pacificome has no effect on the direction of Vanguard Total i.e., Vanguard Total and Aberdeen Asia go up and down completely randomly.

Pair Corralation between Vanguard Total and Aberdeen Asia

Assuming the 90 days horizon Vanguard Total is expected to generate 22.55 times less return on investment than Aberdeen Asia. But when comparing it to its historical volatility, Vanguard Total Stock is 39.04 times less risky than Aberdeen Asia. It trades about 0.11 of its potential returns per unit of risk. Aberdeen Asia Pacificome is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  311.00  in Aberdeen Asia Pacificome on September 20, 2024 and sell it today you would earn a total of  1,416  from holding Aberdeen Asia Pacificome or generate 455.31% return on investment over 90 days.

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

Vanguard Total Stock  vs.  Aberdeen Asia Pacificome

Vanguard Total Stock

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aberdeen Asia Pacificome

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Vanguard Total and Aberdeen Asia

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

The idea behind Vanguard Total Stock and Aberdeen Asia Pacificome 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.