Correlation Between American Funds and Aberdeen Gbl
Can any of the company-specific risk be diversified away by investing in both American Funds and Aberdeen Gbl 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 American Funds and Aberdeen Gbl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Retirement and Aberdeen Gbl Eq, you can compare the effects of market volatilities on American Funds and Aberdeen Gbl 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 American Funds with a short position of Aberdeen Gbl. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Aberdeen Gbl.
Diversification Opportunities for American Funds and Aberdeen Gbl
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Aberdeen is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Retirement and Aberdeen Gbl Eq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Gbl Eq and American Funds 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 American Funds Retirement are associated (or correlated) with Aberdeen Gbl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Gbl Eq has no effect on the direction of American Funds i.e., American Funds and Aberdeen Gbl go up and down completely randomly.
Pair Corralation between American Funds and Aberdeen Gbl
Assuming the 90 days horizon American Funds Retirement is expected to generate 0.51 times more return on investment than Aberdeen Gbl. However, American Funds Retirement is 1.95 times less risky than Aberdeen Gbl. It trades about 0.18 of its potential returns per unit of risk. Aberdeen Gbl Eq is currently generating about -0.05 per unit of risk. If you would invest 1,264 in American Funds Retirement on September 1, 2024 and sell it today you would earn a total of 16.00 from holding American Funds Retirement or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Funds Retirement vs. Aberdeen Gbl Eq
Performance |
| Timeline |
| American Funds Retirement |
| Aberdeen Gbl Eq |
American Funds and Aberdeen Gbl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Aberdeen Gbl
The main advantage of trading using opposite American Funds and Aberdeen Gbl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Aberdeen Gbl 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 Gbl will offset losses from the drop in Aberdeen Gbl's long position.| American Funds vs. Mesirow Financial Small | American Funds vs. Davis Financial Fund | American Funds vs. Icon Financial Fund | American Funds vs. Blackrock Financial Institutions |
| Aberdeen Gbl vs. Blackrock Moderate Prepared | Aberdeen Gbl vs. Target Retirement 2040 | Aberdeen Gbl vs. Wisdomtree Siegel Moderate | Aberdeen Gbl vs. American Funds Retirement |
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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