Correlation Between Aberdeen Income and Financial

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Can any of the company-specific risk be diversified away by investing in both Aberdeen Income and Financial 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 Income and Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberdeen Income Credit and Financial 15 Split, you can compare the effects of market volatilities on Aberdeen Income and Financial 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 Income with a short position of Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Income and Financial.

Diversification Opportunities for Aberdeen Income and Financial

0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between Aberdeen and Financial is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Income Credit and Financial 15 Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial 15 Split and Aberdeen Income 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 Income Credit are associated (or correlated) with Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial 15 Split has no effect on the direction of Aberdeen Income i.e., Aberdeen Income and Financial go up and down completely randomly.

Pair Corralation between Aberdeen Income and Financial

Considering the 90-day investment horizon Aberdeen Income Credit is expected to generate 0.31 times more return on investment than Financial. However, Aberdeen Income Credit is 3.19 times less risky than Financial. It trades about 0.43 of its potential returns per unit of risk. Financial 15 Split is currently generating about 0.12 per unit of risk. If you would invest  575.00  in Aberdeen Income Credit on October 20, 2024 and sell it today you would earn a total of  34.00  from holding Aberdeen Income Credit or generate 5.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Aberdeen Income Credit  vs.  Financial 15 Split

 Performance 
       Timeline  
Aberdeen Income Credit 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Aberdeen Income Credit has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively invariable fundamental indicators, Aberdeen Income is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
Financial 15 Split 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Financial 15 Split are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Aberdeen Income and Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aberdeen Income and Financial

The main advantage of trading using opposite Aberdeen Income and Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Income position performs unexpectedly, Financial 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 Financial will offset losses from the drop in Financial's long position.
The idea behind Aberdeen Income Credit and Financial 15 Split 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.
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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