Correlation Between Aberdeen Income and Ivy Limited

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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 Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy28.28%
ValuesDaily Returns

Aberdeen Income Credit  vs.  Ivy Limited Term Bond

 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 latest abnormal performance, the Fund's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the fund retail investors.
Ivy Limited Term 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ivy Limited Term Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Ivy Limited is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.
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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