Correlation Between Red Oak and Aberdeen Global
Can any of the company-specific risk be diversified away by investing in both Red Oak and Aberdeen Global 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 Red Oak and Aberdeen Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Oak Technology and Aberdeen Global Fixed, you can compare the effects of market volatilities on Red Oak and Aberdeen Global 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 Red Oak with a short position of Aberdeen Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Oak and Aberdeen Global.
Diversification Opportunities for Red Oak and Aberdeen Global
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Red and Aberdeen is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Red Oak Technology and Aberdeen Global Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Global Fixed and Red Oak 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 Red Oak Technology are associated (or correlated) with Aberdeen Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Global Fixed has no effect on the direction of Red Oak i.e., Red Oak and Aberdeen Global go up and down completely randomly.
Pair Corralation between Red Oak and Aberdeen Global
Assuming the 90 days horizon Red Oak Technology is expected to generate 3.75 times more return on investment than Aberdeen Global. However, Red Oak is 3.75 times more volatile than Aberdeen Global Fixed. It trades about 0.1 of its potential returns per unit of risk. Aberdeen Global Fixed is currently generating about 0.03 per unit of risk. If you would invest 2,768 in Red Oak Technology on August 30, 2024 and sell it today you would earn a total of 2,081 from holding Red Oak Technology or generate 75.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Oak Technology vs. Aberdeen Global Fixed
Performance |
| Timeline |
| Red Oak Technology |
| Aberdeen Global Fixed |
Red Oak and Aberdeen Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Oak and Aberdeen Global
The main advantage of trading using opposite Red Oak and Aberdeen Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Oak position performs unexpectedly, Aberdeen Global 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 Global will offset losses from the drop in Aberdeen Global's long position.| Red Oak vs. Live Oak Health | Red Oak vs. HUMANA INC | Red Oak vs. Aquagold International | Red Oak vs. Barloworld Ltd ADR |
| Aberdeen Global vs. Gamco Natural Resources | Aberdeen Global vs. Icon Natural Resources | Aberdeen Global vs. Fidelity Advisor Energy | Aberdeen Global vs. Clearbridge Energy Mlp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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