Correlation Between Aberdeen Small and Aberdeen Emerging
Can any of the company-specific risk be diversified away by investing in both Aberdeen Small and Aberdeen 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 Small and Aberdeen Emerging 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 Emerging Markets, you can compare the effects of market volatilities on Aberdeen Small and Aberdeen 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 Small with a short position of Aberdeen Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Small and Aberdeen Emerging.
Diversification Opportunities for Aberdeen Small and Aberdeen Emerging
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aberdeen and Aberdeen is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Small Cap and Aberdeen Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Emerging Markets 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 Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Emerging Markets has no effect on the direction of Aberdeen Small i.e., Aberdeen Small and Aberdeen Emerging go up and down completely randomly.
Pair Corralation between Aberdeen Small and Aberdeen Emerging
Assuming the 90 days horizon Aberdeen Small Cap is expected to generate 1.32 times more return on investment than Aberdeen Emerging. However, Aberdeen Small is 1.32 times more volatile than Aberdeen Emerging Markets. It trades about 0.04 of its potential returns per unit of risk. Aberdeen Emerging Markets is currently generating about 0.03 per unit of risk. If you would invest 2,297 in Aberdeen Small Cap on September 3, 2024 and sell it today you would earn a total of 478.00 from holding Aberdeen Small Cap or generate 20.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aberdeen Small Cap vs. Aberdeen Emerging Markets
Performance |
| Timeline |
| Aberdeen Small Cap |
| Aberdeen Emerging Markets |
Aberdeen Small and Aberdeen Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberdeen Small and Aberdeen Emerging
The main advantage of trading using opposite Aberdeen Small and Aberdeen Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Small position performs unexpectedly, Aberdeen 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 Aberdeen Emerging will offset losses from the drop in Aberdeen Emerging's long position.| Aberdeen Small vs. Aberdeen Small Cap | Aberdeen Small vs. Ab International Value | Aberdeen Small vs. Aberdeen Small Cap | Aberdeen Small vs. Blackrock Large Cap |
| Aberdeen Emerging vs. Transamerica Funds | Aberdeen Emerging vs. California High Yield Municipal | Aberdeen Emerging vs. Franklin High Yield | Aberdeen Emerging vs. T Rowe Price |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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