Correlation Between Ab International and Aberdeen
Can any of the company-specific risk be diversified away by investing in both Ab International and Aberdeen 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 Ab International and Aberdeen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab International Value and Aberdeen Eq Long Short, you can compare the effects of market volatilities on Ab International and Aberdeen 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 Ab International with a short position of Aberdeen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab International and Aberdeen.
Diversification Opportunities for Ab International and Aberdeen
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ABICX and Aberdeen is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Ab International Value and Aberdeen Eq Long Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Eq Long and Ab International 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 Ab International Value are associated (or correlated) with Aberdeen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Eq Long has no effect on the direction of Ab International i.e., Ab International and Aberdeen go up and down completely randomly.
Pair Corralation between Ab International and Aberdeen
Assuming the 90 days horizon Ab International is expected to generate 1.22 times less return on investment than Aberdeen. But when comparing it to its historical volatility, Ab International Value is 1.29 times less risky than Aberdeen. It trades about 0.05 of its potential returns per unit of risk. Aberdeen Eq Long Short is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 804.00 in Aberdeen Eq Long Short on July 6, 2024 and sell it today you would earn a total of 51.00 from holding Aberdeen Eq Long Short or generate 6.34% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Ab International Value vs. Aberdeen Eq Long Short
Performance |
Timeline |
Ab International Value |
Aberdeen Eq Long |
Ab International and Aberdeen Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ab International and Aberdeen
The main advantage of trading using opposite Ab International and Aberdeen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab International position performs unexpectedly, Aberdeen 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 will offset losses from the drop in Aberdeen's long position.Ab International vs. Ab Global E | Ab International vs. Ab Global E | Ab International vs. Ab Global E | Ab International vs. Ab Minnesota Portfolio |
Aberdeen vs. Ab International Value | Aberdeen vs. Blackrock Large Cap | Aberdeen vs. Loomis Sayles Strategic |
Check out your portfolio center.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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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