Correlation Between Aberdeen Income and Ivy Limited
Can any of the company-specific risk be diversified away by investing in both Aberdeen Income and Ivy Limited 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 Ivy Limited 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 Ivy Limited Term Bond, you can compare the effects of market volatilities on Aberdeen Income and Ivy Limited 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 Ivy Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Income and Ivy Limited.
Diversification Opportunities for Aberdeen Income and Ivy Limited
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aberdeen and Ivy is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Income Credit and Ivy Limited Term Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Limited Term 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 Ivy Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Limited Term has no effect on the direction of Aberdeen Income i.e., Aberdeen Income and Ivy Limited go up and down completely randomly.
Pair Corralation between Aberdeen Income and Ivy Limited
Considering the 90-day investment horizon Aberdeen Income Credit is expected to generate 5.81 times more return on investment than Ivy Limited. However, Aberdeen Income is 5.81 times more volatile than Ivy Limited Term Bond. It trades about 0.04 of its potential returns per unit of risk. Ivy Limited Term Bond is currently generating about 0.07 per unit of risk. If you would invest 484.00 in Aberdeen Income Credit on September 20, 2024 and sell it today you would earn a total of 100.00 from holding Aberdeen Income Credit or generate 20.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 28.28% |
| Values | Daily Returns |
Aberdeen Income Credit vs. Ivy Limited Term Bond
Performance |
| Timeline |
| Aberdeen Income Credit |
| Ivy Limited Term |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Aberdeen Income and Ivy Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberdeen Income and Ivy Limited
The main advantage of trading using opposite Aberdeen Income and Ivy Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Income position performs unexpectedly, Ivy Limited 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 Ivy Limited will offset losses from the drop in Ivy Limited's long position.The idea behind Aberdeen Income Credit and Ivy Limited Term Bond 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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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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