Correlation Between Aberdeen Select and Diamond Hill
Can any of the company-specific risk be diversified away by investing in both Aberdeen Select and Diamond Hill 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 Select and Diamond Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberdeen Select International and Diamond Hill Large, you can compare the effects of market volatilities on Aberdeen Select and Diamond Hill 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 Select with a short position of Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Select and Diamond Hill.
Diversification Opportunities for Aberdeen Select and Diamond Hill
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aberdeen and Diamond is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Select International and Diamond Hill Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Large and Aberdeen Select 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 Select International are associated (or correlated) with Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Large has no effect on the direction of Aberdeen Select i.e., Aberdeen Select and Diamond Hill go up and down completely randomly.
Pair Corralation between Aberdeen Select and Diamond Hill
Assuming the 90 days horizon Aberdeen Select is expected to generate 2.12 times less return on investment than Diamond Hill. In addition to that, Aberdeen Select is 1.14 times more volatile than Diamond Hill Large. It trades about 0.05 of its total potential returns per unit of risk. Diamond Hill Large is currently generating about 0.12 per unit of volatility. If you would invest 3,176 in Diamond Hill Large on August 28, 2024 and sell it today you would earn a total of 608.00 from holding Diamond Hill Large or generate 19.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aberdeen Select International vs. Diamond Hill Large
Performance |
| Timeline |
| Aberdeen Select Inte |
| Diamond Hill Large |
Aberdeen Select and Diamond Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberdeen Select and Diamond Hill
The main advantage of trading using opposite Aberdeen Select and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Select position performs unexpectedly, Diamond Hill 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 Diamond Hill will offset losses from the drop in Diamond Hill's long position.| Aberdeen Select vs. Marsico 21st Century | Aberdeen Select vs. Harbor International Fund | Aberdeen Select vs. Loomis Sayles Bond | Aberdeen Select vs. Northern Small Cap |
| Diamond Hill vs. Loomis Sayles Growth | Diamond Hill vs. Loomis Sayles Growth | Diamond Hill vs. Loomis Sayles Growth |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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