Correlation Between Pear Tree and Aberdeen Emerging
Can any of the company-specific risk be diversified away by investing in both Pear Tree and Aberdeen Emerging 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 Pear Tree and Aberdeen Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pear Tree Polaris and Aberdeen Emerging Markts, you can compare the effects of market volatilities on Pear Tree and Aberdeen Emerging 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 Pear Tree with a short position of Aberdeen Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pear Tree and Aberdeen Emerging.
Diversification Opportunities for Pear Tree and Aberdeen Emerging
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pear and Aberdeen is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Pear Tree Polaris and Aberdeen Emerging Markts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Emerging Markts and Pear Tree 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 Pear Tree Polaris are associated (or correlated) with Aberdeen Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Emerging Markts has no effect on the direction of Pear Tree i.e., Pear Tree and Aberdeen Emerging go up and down completely randomly.
Pair Corralation between Pear Tree and Aberdeen Emerging
Assuming the 90 days horizon Pear Tree Polaris is expected to under-perform the Aberdeen Emerging. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pear Tree Polaris is 1.05 times less risky than Aberdeen Emerging. The mutual fund trades about -0.14 of its potential returns per unit of risk. The Aberdeen Emerging Markts is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 1,418 in Aberdeen Emerging Markts on September 2, 2024 and sell it today you would lose (33.00) from holding Aberdeen Emerging Markts or give up 2.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pear Tree Polaris vs. Aberdeen Emerging Markts
Performance |
| Timeline |
| Pear Tree Polaris |
| Aberdeen Emerging Markts |
Pear Tree and Aberdeen Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pear Tree and Aberdeen Emerging
The main advantage of trading using opposite Pear Tree and Aberdeen Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pear Tree position performs unexpectedly, Aberdeen Emerging 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 Emerging will offset losses from the drop in Aberdeen Emerging's long position.| Pear Tree vs. Pear Tree Polaris | Pear Tree vs. Seafarer Overseas Growth | Pear Tree vs. International Fund International | Pear Tree vs. Lazard Global Listed |
| Aberdeen Emerging vs. Siit Emerging Markets | Aberdeen Emerging vs. Ep Emerging Markets | Aberdeen Emerging vs. Dws Emerging Markets | Aberdeen Emerging vs. Artisan Emerging Markets |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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