Correlation Between Legal General and Aberdeen Diversified
Can any of the company-specific risk be diversified away by investing in both Legal General and Aberdeen Diversified 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 Legal General and Aberdeen Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legal General Group and Aberdeen Diversified Income, you can compare the effects of market volatilities on Legal General and Aberdeen Diversified 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 Legal General with a short position of Aberdeen Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legal General and Aberdeen Diversified.
Diversification Opportunities for Legal General and Aberdeen Diversified
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Legal and Aberdeen is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Legal General Group and Aberdeen Diversified Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Diversified and Legal General 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 Legal General Group are associated (or correlated) with Aberdeen Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Diversified has no effect on the direction of Legal General i.e., Legal General and Aberdeen Diversified go up and down completely randomly.
Pair Corralation between Legal General and Aberdeen Diversified
Assuming the 90 days trading horizon Legal General is expected to generate 1.59 times less return on investment than Aberdeen Diversified. But when comparing it to its historical volatility, Legal General Group is 1.26 times less risky than Aberdeen Diversified. It trades about 0.02 of its potential returns per unit of risk. Aberdeen Diversified Income is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 4,104 in Aberdeen Diversified Income on September 14, 2024 and sell it today you would earn a total of 196.00 from holding Aberdeen Diversified Income or generate 4.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legal General Group vs. Aberdeen Diversified Income
Performance |
| Timeline |
| Legal General Group |
| Aberdeen Diversified |
Legal General and Aberdeen Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legal General and Aberdeen Diversified
The main advantage of trading using opposite Legal General and Aberdeen Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legal General position performs unexpectedly, Aberdeen Diversified 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 Diversified will offset losses from the drop in Aberdeen Diversified's long position.| Legal General vs. Inspiration Healthcare Group | Legal General vs. Target Healthcare REIT | Legal General vs. Cardinal Health | Legal General vs. Abingdon Health Plc |
| Aberdeen Diversified vs. JB Hunt Transport | Aberdeen Diversified vs. Norman Broadbent Plc | Aberdeen Diversified vs. EVS Broadcast Equipment | Aberdeen Diversified vs. Regions Financial Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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