Correlation Between Pender Real and Aberdeen
Can any of the company-specific risk be diversified away by investing in both Pender Real and Aberdeen 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 Pender Real and Aberdeen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pender Real Estate and Aberdeen Multi Cap Equity, you can compare the effects of market volatilities on Pender Real and Aberdeen 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 Pender Real with a short position of Aberdeen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pender Real and Aberdeen.
Diversification Opportunities for Pender Real and Aberdeen
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pender and Aberdeen is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Pender Real Estate and Aberdeen Multi Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Multi Cap and Pender Real 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 Pender Real Estate are associated (or correlated) with Aberdeen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Multi Cap has no effect on the direction of Pender Real i.e., Pender Real and Aberdeen go up and down completely randomly.
Pair Corralation between Pender Real and Aberdeen
Assuming the 90 days horizon Pender Real is expected to generate 1.34 times less return on investment than Aberdeen. But when comparing it to its historical volatility, Pender Real Estate is 15.24 times less risky than Aberdeen. It trades about 0.64 of its potential returns per unit of risk. Aberdeen Multi Cap Equity is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 754.00 in Aberdeen Multi Cap Equity on August 26, 2024 and sell it today you would earn a total of 110.00 from holding Aberdeen Multi Cap Equity or generate 14.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pender Real Estate vs. Aberdeen Multi Cap Equity
Performance |
| Timeline |
| Pender Real Estate |
| Aberdeen Multi Cap |
Pender Real and Aberdeen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pender Real and Aberdeen
The main advantage of trading using opposite Pender Real and Aberdeen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pender Real position performs unexpectedly, Aberdeen 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 will offset losses from the drop in Aberdeen's long position.| Pender Real vs. Vanguard Total Stock | Pender Real vs. Vanguard 500 Index | Pender Real vs. Vanguard Total Stock | Pender Real vs. Vanguard Total Stock |
| Aberdeen vs. Pender Real Estate | Aberdeen vs. Deutsche Real Estate | Aberdeen vs. Prudential Real Estate | Aberdeen vs. Jhancock Real Estate |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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