Correlation Between Aberdeen Small and Aberdeen Global
Can any of the company-specific risk be diversified away by investing in both Aberdeen Small and Aberdeen Global 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 Small and Aberdeen Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberdeen Small Cap and Aberdeen Global Fixed, you can compare the effects of market volatilities on Aberdeen Small and Aberdeen Global 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 Small with a short position of Aberdeen Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Small and Aberdeen Global.
Diversification Opportunities for Aberdeen Small and Aberdeen Global
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aberdeen and Aberdeen is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Small Cap and Aberdeen Global Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Global Fixed and Aberdeen Small 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 Small Cap are associated (or correlated) with Aberdeen Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Global Fixed has no effect on the direction of Aberdeen Small i.e., Aberdeen Small and Aberdeen Global go up and down completely randomly.
Pair Corralation between Aberdeen Small and Aberdeen Global
Assuming the 90 days horizon Aberdeen Small Cap is expected to generate 5.69 times more return on investment than Aberdeen Global. However, Aberdeen Small is 5.69 times more volatile than Aberdeen Global Fixed. It trades about 0.13 of its potential returns per unit of risk. Aberdeen Global Fixed is currently generating about 0.16 per unit of risk. If you would invest 2,283 in Aberdeen Small Cap on September 1, 2024 and sell it today you would earn a total of 492.00 from holding Aberdeen Small Cap or generate 21.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aberdeen Small Cap vs. Aberdeen Global Fixed
Performance |
| Timeline |
| Aberdeen Small Cap |
| Aberdeen Global Fixed |
Aberdeen Small and Aberdeen Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberdeen Small and Aberdeen Global
The main advantage of trading using opposite Aberdeen Small and Aberdeen Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Small position performs unexpectedly, Aberdeen Global 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 Global will offset losses from the drop in Aberdeen Global's long position.| Aberdeen Small vs. Aberdeen Emerging Markets | Aberdeen Small vs. Aberdeen Emerging Markets | Aberdeen Small vs. Aberdeen Emerging Markets | Aberdeen Small vs. Aberdeen Gbl Eq |
| Aberdeen Global vs. Aberdeen Emerging Markets | Aberdeen Global vs. Aberdeen Emerging Markets | Aberdeen Global vs. Aberdeen Emerging Markets | Aberdeen Global 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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