Correlation Between Aberdeen Emerging and Aberdeen Tax-free
Can any of the company-specific risk be diversified away by investing in both Aberdeen Emerging and Aberdeen Tax-free 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 Aberdeen Tax-free 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 Aberdeen Tax Free Income, you can compare the effects of market volatilities on Aberdeen Emerging and Aberdeen Tax-free 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 Aberdeen Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Emerging and Aberdeen Tax-free.
Diversification Opportunities for Aberdeen Emerging and Aberdeen Tax-free
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aberdeen and Aberdeen is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Emerging Markets and Aberdeen Tax Free Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Tax Free 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 Aberdeen Tax-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Tax Free has no effect on the direction of Aberdeen Emerging i.e., Aberdeen Emerging and Aberdeen Tax-free go up and down completely randomly.
Pair Corralation between Aberdeen Emerging and Aberdeen Tax-free
Assuming the 90 days horizon Aberdeen Emerging Markets is expected to generate 4.11 times more return on investment than Aberdeen Tax-free. However, Aberdeen Emerging is 4.11 times more volatile than Aberdeen Tax Free Income. It trades about 0.02 of its potential returns per unit of risk. Aberdeen Tax Free Income is currently generating about 0.08 per unit of risk. If you would invest 1,238 in Aberdeen Emerging Markets on August 26, 2024 and sell it today you would earn a total of 118.00 from holding Aberdeen Emerging Markets or generate 9.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aberdeen Emerging Markets vs. Aberdeen Tax Free Income
Performance |
| Timeline |
| Aberdeen Emerging Markets |
| Aberdeen Tax Free |
Aberdeen Emerging and Aberdeen Tax-free Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberdeen Emerging and Aberdeen Tax-free
The main advantage of trading using opposite Aberdeen Emerging and Aberdeen Tax-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Emerging position performs unexpectedly, Aberdeen Tax-free 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 Tax-free will offset losses from the drop in Aberdeen Tax-free's long position.| Aberdeen Emerging vs. Aberdeen Emerging Markets | Aberdeen Emerging vs. Aberdeen Emerging Markets | Aberdeen Emerging vs. Aberdeen Gbl Eq | Aberdeen Emerging vs. Aberdeen Gbl Eq |
| Aberdeen Tax-free vs. Aberdeen Emerging Markets | Aberdeen Tax-free vs. Aberdeen Emerging Markets | Aberdeen Tax-free vs. Aberdeen Emerging Markets | Aberdeen Tax-free 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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