Correlation Between Aberdeen Global and Metropolitan West
Can any of the company-specific risk be diversified away by investing in both Aberdeen Global and Metropolitan West 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 Global and Metropolitan West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberdeen Global High and Metropolitan West High, you can compare the effects of market volatilities on Aberdeen Global and Metropolitan West 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 Global with a short position of Metropolitan West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Global and Metropolitan West.
Diversification Opportunities for Aberdeen Global and Metropolitan West
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aberdeen and Metropolitan is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Global High and Metropolitan West High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan West High and Aberdeen Global 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 Global High are associated (or correlated) with Metropolitan West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan West High has no effect on the direction of Aberdeen Global i.e., Aberdeen Global and Metropolitan West go up and down completely randomly.
Pair Corralation between Aberdeen Global and Metropolitan West
Assuming the 90 days horizon Aberdeen Global High is expected to generate 0.89 times more return on investment than Metropolitan West. However, Aberdeen Global High is 1.12 times less risky than Metropolitan West. It trades about 0.17 of its potential returns per unit of risk. Metropolitan West High is currently generating about 0.13 per unit of risk. If you would invest 587.00 in Aberdeen Global High on November 27, 2024 and sell it today you would earn a total of 110.00 from holding Aberdeen Global High or generate 18.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aberdeen Global High vs. Metropolitan West High
Performance |
| Timeline |
| Aberdeen Global High |
| Metropolitan West High |
Aberdeen Global and Metropolitan West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberdeen Global and Metropolitan West
The main advantage of trading using opposite Aberdeen Global and Metropolitan West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Global position performs unexpectedly, Metropolitan West 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 Metropolitan West will offset losses from the drop in Metropolitan West's long position.| Aberdeen Global vs. Manning Napier Diversified | Aberdeen Global vs. American Funds Conservative | Aberdeen Global vs. Global Diversified Income | Aberdeen Global vs. Guidepath Conservative Income |
| Metropolitan West vs. Federated Total Return | Metropolitan West vs. Global Bond Fund | Metropolitan West vs. Government Bond Fund | Metropolitan West vs. Aberdeen Global High |
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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