Correlation Between Barings Active and Aberdeen Small
Can any of the company-specific risk be diversified away by investing in both Barings Active and Aberdeen Small 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 Barings Active and Aberdeen Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings Active Short and Aberdeen Small Cap, you can compare the effects of market volatilities on Barings Active and Aberdeen Small 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 Barings Active with a short position of Aberdeen Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Aberdeen Small.
Diversification Opportunities for Barings Active and Aberdeen Small
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Barings and Aberdeen is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Aberdeen Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Small Cap and Barings Active 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 Barings Active Short are associated (or correlated) with Aberdeen Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Small Cap has no effect on the direction of Barings Active i.e., Barings Active and Aberdeen Small go up and down completely randomly.
Pair Corralation between Barings Active and Aberdeen Small
Assuming the 90 days horizon Barings Active is expected to generate 5.35 times less return on investment than Aberdeen Small. But when comparing it to its historical volatility, Barings Active Short is 9.55 times less risky than Aberdeen Small. It trades about 0.24 of its potential returns per unit of risk. Aberdeen Small Cap is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,144 in Aberdeen Small Cap on September 1, 2024 and sell it today you would earn a total of 689.00 from holding Aberdeen Small Cap or generate 21.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Active Short vs. Aberdeen Small Cap
Performance |
| Timeline |
| Barings Active Short |
| Aberdeen Small Cap |
Barings Active and Aberdeen Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and Aberdeen Small
The main advantage of trading using opposite Barings Active and Aberdeen Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active position performs unexpectedly, Aberdeen Small 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 Small will offset losses from the drop in Aberdeen Small's long position.| Barings Active vs. Barings Active Short | Barings Active vs. Barings Emerging Markets | Barings Active vs. Barings Emerging Markets | Barings Active vs. Barings Global Floating |
| Aberdeen Small vs. Aberdeen Emerging Markets | Aberdeen Small vs. Aberdeen Emerging Markets | Aberdeen Small vs. Aberdeen Emerging Markets | Aberdeen Small vs. Aberdeen Gbl Eq |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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