Correlation Between Barings Us and Aberdeen China
Can any of the company-specific risk be diversified away by investing in both Barings Us and Aberdeen China 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 Us and Aberdeen China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings High Yield and Aberdeen China Oppty, you can compare the effects of market volatilities on Barings Us and Aberdeen China 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 Us with a short position of Aberdeen China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Us and Aberdeen China.
Diversification Opportunities for Barings Us and Aberdeen China
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barings and Aberdeen is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Barings High Yield and Aberdeen China Oppty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen China Oppty and Barings Us 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 High Yield are associated (or correlated) with Aberdeen China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen China Oppty has no effect on the direction of Barings Us i.e., Barings Us and Aberdeen China go up and down completely randomly.
Pair Corralation between Barings Us and Aberdeen China
Assuming the 90 days horizon Barings Us is expected to generate 2.87 times less return on investment than Aberdeen China. But when comparing it to its historical volatility, Barings High Yield is 6.19 times less risky than Aberdeen China. It trades about 0.22 of its potential returns per unit of risk. Aberdeen China Oppty is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,961 in Aberdeen China Oppty on November 3, 2024 and sell it today you would earn a total of 40.00 from holding Aberdeen China Oppty or generate 2.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings High Yield vs. Aberdeen China Oppty
Performance |
| Timeline |
| Barings High Yield |
| Aberdeen China Oppty |
Barings Us and Aberdeen China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Us and Aberdeen China
The main advantage of trading using opposite Barings Us and Aberdeen China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Us position performs unexpectedly, Aberdeen China 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 China will offset losses from the drop in Aberdeen China's long position.| Barings Us vs. Allianzgi Convertible Income | Barings Us vs. Fidelity Sai Convertible | Barings Us vs. Calamos Dynamic Convertible | Barings Us vs. Absolute Convertible Arbitrage |
| Aberdeen China vs. Dunham High Yield | Aberdeen China vs. Strategic Advisers Income | Aberdeen China vs. Simt High Yield | Aberdeen China vs. Gmo High Yield |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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