Correlation Between Aberdeen and Aberdeen Small
Can any of the company-specific risk be diversified away by investing in both Aberdeen and Aberdeen Small 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 Aberdeen Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberdeen Equity Instl and Aberdeen Small Cap, you can compare the effects of market volatilities on Aberdeen and Aberdeen Small 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 Aberdeen Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen and Aberdeen Small.
Diversification Opportunities for Aberdeen and Aberdeen Small
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aberdeen and Aberdeen is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Equity Instl and Aberdeen Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Small 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 Equity Instl are associated (or correlated) with Aberdeen Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Small Cap has no effect on the direction of Aberdeen i.e., Aberdeen and Aberdeen Small go up and down completely randomly.
Pair Corralation between Aberdeen and Aberdeen Small
Assuming the 90 days horizon Aberdeen is expected to generate 1.51 times less return on investment than Aberdeen Small. But when comparing it to its historical volatility, Aberdeen Equity Instl is 1.52 times less risky than Aberdeen Small. It trades about 0.06 of its potential returns per unit of risk. Aberdeen Small Cap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,059 in Aberdeen Small Cap on August 26, 2024 and sell it today you would earn a total of 744.00 from holding Aberdeen Small Cap or generate 24.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aberdeen Equity Instl vs. Aberdeen Small Cap
Performance |
| Timeline |
| Aberdeen Equity Instl |
| Aberdeen Small Cap |
Aberdeen and Aberdeen Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberdeen and Aberdeen Small
The main advantage of trading using opposite Aberdeen and Aberdeen Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen position performs unexpectedly, Aberdeen Small 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 Small will offset losses from the drop in Aberdeen Small's long position.| Aberdeen vs. Aberdeen Emerging Markets | Aberdeen vs. Aberdeen Emerging Markets | Aberdeen vs. Aberdeen Emerging Markets | Aberdeen vs. Aberdeen Gbl Eq |
| Aberdeen Small vs. Aberdeen Small Cap | Aberdeen Small vs. Needham Aggressive Growth | Aberdeen Small vs. Aquagold International | Aberdeen Small vs. Morningstar Unconstrained Allocation |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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