Correlation Between Aberdeen Gbl and Aberdeen Emerging

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

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

Diversification Opportunities for Aberdeen Gbl and Aberdeen Emerging

0.94

Correlation Coefficient

Aberdeen Gbl  Aberdeen Emerging

Almost no diversification

The 3 months correlation between Aberdeen and Aberdeen is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Gbl Eq and Aberdeen Emerging Markts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Emerging Markts and Aberdeen Gbl 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 Gbl Eq are associated (or correlated) with Aberdeen Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Emerging Markts has no effect on the direction of Aberdeen Gbl i.e., Aberdeen Gbl and Aberdeen Emerging go up and down completely randomly.

Pair Corralation between Aberdeen Gbl and Aberdeen Emerging

Assuming the 90 days horizon Aberdeen Gbl Eq is expected to under-perform the Aberdeen Emerging. But the mutual fund apears to be less risky and, when comparing its historical volatility, Aberdeen Gbl Eq is 1.09 times less risky than Aberdeen Emerging. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Aberdeen Emerging Markts is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,342  in Aberdeen Emerging Markts on February 5, 2024 and sell it today you would earn a total of  16.00  from holding Aberdeen Emerging Markts or generate 1.19% return on investment over 90 days.

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

Aberdeen Gbl Eq  vs.  Aberdeen Emerging Markts

Aberdeen Gbl Eq

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Gbl Eq are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Aberdeen Gbl is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aberdeen Emerging Markts

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Emerging Markts are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Aberdeen Emerging may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Aberdeen Gbl and Aberdeen Emerging

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

The idea behind Aberdeen Gbl Eq and Aberdeen Emerging Markts 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.