Correlation Between Aberdeen and Transamerica Large
Can any of the company-specific risk be diversified away by investing in both Aberdeen and Transamerica Large 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 and Transamerica Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberdeen Multi Cap Equity and Transamerica Large Cap, you can compare the effects of market volatilities on Aberdeen and Transamerica Large 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 with a short position of Transamerica Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen and Transamerica Large.
Diversification Opportunities for Aberdeen and Transamerica Large
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aberdeen and Transamerica is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Multi Cap Equity and Transamerica Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Large Cap and Aberdeen 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 Multi Cap Equity are associated (or correlated) with Transamerica Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Large Cap has no effect on the direction of Aberdeen i.e., Aberdeen and Transamerica Large go up and down completely randomly.
Pair Corralation between Aberdeen and Transamerica Large
Assuming the 90 days horizon Aberdeen Multi Cap Equity is expected to generate 1.02 times more return on investment than Transamerica Large. However, Aberdeen is 1.02 times more volatile than Transamerica Large Cap. It trades about 0.3 of its potential returns per unit of risk. Transamerica Large Cap is currently generating about 0.31 per unit of risk. If you would invest 838.00 in Aberdeen Multi Cap Equity on September 1, 2024 and sell it today you would earn a total of 44.00 from holding Aberdeen Multi Cap Equity or generate 5.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aberdeen Multi Cap Equity vs. Transamerica Large Cap
Performance |
| Timeline |
| Aberdeen Multi Cap |
| Transamerica Large Cap |
Aberdeen and Transamerica Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberdeen and Transamerica Large
The main advantage of trading using opposite Aberdeen and Transamerica Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen position performs unexpectedly, Transamerica Large 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 Transamerica Large will offset losses from the drop in Transamerica Large's long position.| Aberdeen vs. Us Small Cap | Aberdeen vs. Chartwell Small Cap | Aberdeen vs. The Hartford Small | Aberdeen vs. Legg Mason Partners |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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