Correlation Between Aberdeen New and FIRST TRUST
Can any of the company-specific risk be diversified away by investing in both Aberdeen New and FIRST TRUST 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 New and FIRST TRUST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberdeen New India and FIRST TRUST INDXX, you can compare the effects of market volatilities on Aberdeen New and FIRST TRUST 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 New with a short position of FIRST TRUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen New and FIRST TRUST.
Diversification Opportunities for Aberdeen New and FIRST TRUST
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aberdeen and FIRST is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen New India and FIRST TRUST INDXX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST TRUST INDXX and Aberdeen New 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 New India are associated (or correlated) with FIRST TRUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST TRUST INDXX has no effect on the direction of Aberdeen New i.e., Aberdeen New and FIRST TRUST go up and down completely randomly.
Pair Corralation between Aberdeen New and FIRST TRUST
Assuming the 90 days trading horizon Aberdeen New India is expected to generate 1.26 times more return on investment than FIRST TRUST. However, Aberdeen New is 1.26 times more volatile than FIRST TRUST INDXX. It trades about 0.09 of its potential returns per unit of risk. FIRST TRUST INDXX is currently generating about 0.07 per unit of risk. If you would invest 65,400 in Aberdeen New India on September 20, 2024 and sell it today you would earn a total of 16,400 from holding Aberdeen New India or generate 25.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Aberdeen New India vs. FIRST TRUST INDXX
Performance |
| Timeline |
| Aberdeen New India |
| FIRST TRUST INDXX |
Aberdeen New and FIRST TRUST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberdeen New and FIRST TRUST
The main advantage of trading using opposite Aberdeen New and FIRST TRUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen New position performs unexpectedly, FIRST TRUST 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 FIRST TRUST will offset losses from the drop in FIRST TRUST's long position.| Aberdeen New vs. Scottish Mortgage Investment | Aberdeen New vs. Baillie Gifford Growth | Aberdeen New vs. Blackrock Energy and |
| FIRST TRUST vs. Scottish Mortgage Investment | FIRST TRUST vs. VinaCapital Vietnam Opportunity | FIRST TRUST vs. Edinburgh Worldwide Investment | FIRST TRUST vs. Baillie Gifford Growth |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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