Correlation Between Aberdeen China and Acadian Emerging
Can any of the company-specific risk be diversified away by investing in both Aberdeen China and Acadian Emerging 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 Acadian Emerging 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 Acadian Emerging Markets, you can compare the effects of market volatilities on Aberdeen China and Acadian Emerging 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 Acadian Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen China and Acadian Emerging.
Diversification Opportunities for Aberdeen China and Acadian Emerging
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aberdeen and Acadian is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen China Oppty and Acadian Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadian Emerging Markets 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 Acadian Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadian Emerging Markets has no effect on the direction of Aberdeen China i.e., Aberdeen China and Acadian Emerging go up and down completely randomly.
Pair Corralation between Aberdeen China and Acadian Emerging
Assuming the 90 days horizon Aberdeen China Oppty is expected to under-perform the Acadian Emerging. In addition to that, Aberdeen China is 2.67 times more volatile than Acadian Emerging Markets. It trades about -0.15 of its total potential returns per unit of risk. Acadian Emerging Markets is currently generating about -0.19 per unit of volatility. If you would invest 2,404 in Acadian Emerging Markets on August 27, 2024 and sell it today you would lose (71.00) from holding Acadian Emerging Markets or give up 2.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aberdeen China Oppty vs. Acadian Emerging Markets
Performance |
| Timeline |
| Aberdeen China Oppty |
| Acadian Emerging Markets |
Aberdeen China and Acadian Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberdeen China and Acadian Emerging
The main advantage of trading using opposite Aberdeen China and Acadian Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen China position performs unexpectedly, Acadian Emerging 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 Acadian Emerging will offset losses from the drop in Acadian Emerging's long position.| Aberdeen China vs. Precious Metals And | Aberdeen China vs. Invesco Gold Special | Aberdeen China vs. Franklin Gold Precious | Aberdeen China vs. The Gold Bullion |
| Acadian Emerging vs. Acadian Emerging Markets | Acadian Emerging vs. Acadian Emerging Markets | Acadian Emerging vs. Fidelity China Region | Acadian Emerging vs. Janus Forty Fund |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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