Correlation Between Aberdeen Emerging and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Aberdeen Emerging and Old Westbury 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 Emerging and Old Westbury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberdeen Emerging Markets and Old Westbury Municipal, you can compare the effects of market volatilities on Aberdeen Emerging and Old Westbury 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 Emerging with a short position of Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Emerging and Old Westbury.
Diversification Opportunities for Aberdeen Emerging and Old Westbury
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aberdeen and Old is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Emerging Markets and Old Westbury Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Municipal and Aberdeen Emerging 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 Emerging Markets are associated (or correlated) with Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Municipal has no effect on the direction of Aberdeen Emerging i.e., Aberdeen Emerging and Old Westbury go up and down completely randomly.
Pair Corralation between Aberdeen Emerging and Old Westbury
Assuming the 90 days horizon Aberdeen Emerging Markets is expected to under-perform the Old Westbury. In addition to that, Aberdeen Emerging is 3.93 times more volatile than Old Westbury Municipal. It trades about -0.19 of its total potential returns per unit of risk. Old Westbury Municipal is currently generating about -0.12 per unit of volatility. If you would invest 1,141 in Old Westbury Municipal on January 11, 2025 and sell it today you would lose (15.00) from holding Old Westbury Municipal or give up 1.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aberdeen Emerging Markets vs. Old Westbury Municipal
Performance |
| Timeline |
| Aberdeen Emerging Markets |
| Old Westbury Municipal |
Aberdeen Emerging and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberdeen Emerging and Old Westbury
The main advantage of trading using opposite Aberdeen Emerging and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Emerging position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury's long position.| Aberdeen Emerging vs. Aberdeen Emerging Markets | Aberdeen Emerging vs. Aberdeen Emerging Markets | Aberdeen Emerging vs. Aberdeen Gbl Eq | Aberdeen Emerging vs. Columbia Seligman Premium |
| Old Westbury vs. Old Westbury California | Old Westbury vs. Old Westbury Credit | Old Westbury vs. Old Westbury Fixed | Old Westbury vs. Old Westbury Large |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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