Correlation Between Ishares Municipal and Aberdeen Emerging
Can any of the company-specific risk be diversified away by investing in both Ishares Municipal and Aberdeen Emerging 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 Ishares Municipal and Aberdeen Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ishares Municipal Bond and Aberdeen Emerging Markets, you can compare the effects of market volatilities on Ishares Municipal and Aberdeen Emerging 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 Ishares Municipal with a short position of Aberdeen Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ishares Municipal and Aberdeen Emerging.
Diversification Opportunities for Ishares Municipal and Aberdeen Emerging
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between IShares and Aberdeen is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Municipal Bond and Aberdeen Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Emerging Markets and Ishares Municipal 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 Ishares Municipal Bond are associated (or correlated) with Aberdeen Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Emerging Markets has no effect on the direction of Ishares Municipal i.e., Ishares Municipal and Aberdeen Emerging go up and down completely randomly.
Pair Corralation between Ishares Municipal and Aberdeen Emerging
Assuming the 90 days horizon Ishares Municipal Bond is expected to generate 0.33 times more return on investment than Aberdeen Emerging. However, Ishares Municipal Bond is 3.05 times less risky than Aberdeen Emerging. It trades about -0.02 of its potential returns per unit of risk. Aberdeen Emerging Markets is currently generating about -0.21 per unit of risk. If you would invest 1,120 in Ishares Municipal Bond on September 3, 2024 and sell it today you would lose (3.00) from holding Ishares Municipal Bond or give up 0.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ishares Municipal Bond vs. Aberdeen Emerging Markets
Performance |
| Timeline |
| Ishares Municipal Bond |
| Aberdeen Emerging Markets |
Ishares Municipal and Aberdeen Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ishares Municipal and Aberdeen Emerging
The main advantage of trading using opposite Ishares Municipal and Aberdeen Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ishares Municipal position performs unexpectedly, Aberdeen Emerging 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 Aberdeen Emerging will offset losses from the drop in Aberdeen Emerging's long position.| Ishares Municipal vs. T Rowe Price | Ishares Municipal vs. John Hancock Funds | Ishares Municipal vs. Qs Moderate Growth | Ishares Municipal vs. T Rowe Price |
| Aberdeen Emerging vs. Transamerica Funds | Aberdeen Emerging vs. California High Yield Municipal | Aberdeen Emerging vs. Franklin High Yield | Aberdeen Emerging vs. T Rowe Price |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |