Correlation Between Aberdeen International and Central Securities
Can any of the company-specific risk be diversified away by investing in both Aberdeen International and Central Securities 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 International and Central Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberdeen International and Central Securities, you can compare the effects of market volatilities on Aberdeen International and Central Securities 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 International with a short position of Central Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen International and Central Securities.
Diversification Opportunities for Aberdeen International and Central Securities
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aberdeen and Central is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen International and Central Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Securities and Aberdeen 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 Aberdeen International are associated (or correlated) with Central Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Securities has no effect on the direction of Aberdeen International i.e., Aberdeen International and Central Securities go up and down completely randomly.
Pair Corralation between Aberdeen International and Central Securities
Assuming the 90 days horizon Aberdeen International is expected to generate 13.02 times more return on investment than Central Securities. However, Aberdeen International is 13.02 times more volatile than Central Securities. It trades about 0.12 of its potential returns per unit of risk. Central Securities is currently generating about 0.21 per unit of risk. If you would invest 3.00 in Aberdeen International on August 29, 2024 and sell it today you would earn a total of 0.60 from holding Aberdeen International or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aberdeen International vs. Central Securities
Performance |
| Timeline |
| Aberdeen International |
| Central Securities |
Aberdeen International and Central Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberdeen International and Central Securities
The main advantage of trading using opposite Aberdeen International and Central Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen International position performs unexpectedly, Central Securities 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 Central Securities will offset losses from the drop in Central Securities' long position.| Aberdeen International vs. Invesco High Income | Aberdeen International vs. Blackrock Muniholdings Ny | Aberdeen International vs. MFS Investment Grade | Aberdeen International vs. Federated Premier Municipal |
| Central Securities vs. Invesco High Income | Central Securities vs. Munivest Fund | Central Securities vs. DWS Municipal Income | Central Securities vs. Blackrock Muniyield Quality |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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