Correlation Between Aberdeen China and Prudential Government
Can any of the company-specific risk be diversified away by investing in both Aberdeen China and Prudential Government 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 China and Prudential Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberdeen China Oppty and Prudential Government Money, you can compare the effects of market volatilities on Aberdeen China and Prudential Government 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 China with a short position of Prudential Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen China and Prudential Government.
Diversification Opportunities for Aberdeen China and Prudential Government
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Aberdeen and Prudential is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen China Oppty and Prudential Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Government and Aberdeen China 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 China Oppty are associated (or correlated) with Prudential Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Government has no effect on the direction of Aberdeen China i.e., Aberdeen China and Prudential Government go up and down completely randomly.
Pair Corralation between Aberdeen China and Prudential Government
Assuming the 90 days horizon Aberdeen China Oppty is expected to generate 14.74 times more return on investment than Prudential Government. However, Aberdeen China is 14.74 times more volatile than Prudential Government Money. It trades about 0.03 of its potential returns per unit of risk. Prudential Government Money is currently generating about 0.12 per unit of risk. If you would invest 1,963 in Aberdeen China Oppty on September 13, 2024 and sell it today you would earn a total of 98.00 from holding Aberdeen China Oppty or generate 4.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.32% |
| Values | Daily Returns |
Aberdeen China Oppty vs. Prudential Government Money
Performance |
| Timeline |
| Aberdeen China Oppty |
| Prudential Government |
Aberdeen China and Prudential Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberdeen China and Prudential Government
The main advantage of trading using opposite Aberdeen China and Prudential Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen China position performs unexpectedly, Prudential Government 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 Prudential Government will offset losses from the drop in Prudential Government's long position.| Aberdeen China vs. Prudential Government Money | Aberdeen China vs. Blackrock Exchange Portfolio | Aberdeen China vs. Chestnut Street Exchange | Aberdeen China vs. The Gabelli Money |
| Prudential Government vs. Angel Oak Financial | Prudential Government vs. Prudential Jennison Financial | Prudential Government vs. Vanguard Financials Index | Prudential Government vs. John Hancock Financial |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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