Correlation Between Red Oak and Aberdeen Gbl
Can any of the company-specific risk be diversified away by investing in both Red Oak 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 Red Oak and Aberdeen Gbl 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 Gbl Small, you can compare the effects of market volatilities on Red Oak 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 Red Oak with a short position of Aberdeen Gbl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Oak and Aberdeen Gbl.
Diversification Opportunities for Red Oak and Aberdeen Gbl
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Red and Aberdeen is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Red Oak Technology and Aberdeen Gbl Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Gbl Small 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 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 Small has no effect on the direction of Red Oak i.e., Red Oak and Aberdeen Gbl go up and down completely randomly.
Pair Corralation between Red Oak and Aberdeen Gbl
Assuming the 90 days horizon Red Oak Technology is expected to generate 1.35 times more return on investment than Aberdeen Gbl. However, Red Oak is 1.35 times more volatile than Aberdeen Gbl Small. It trades about 0.09 of its potential returns per unit of risk. Aberdeen Gbl Small is currently generating about 0.05 per unit of risk. If you would invest 3,414 in Red Oak Technology on September 4, 2024 and sell it today you would earn a total of 1,526 from holding Red Oak Technology or generate 44.7% 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 Gbl Small
Performance |
| Timeline |
| Red Oak Technology |
| Aberdeen Gbl Small |
Red Oak and Aberdeen Gbl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Oak and Aberdeen Gbl
The main advantage of trading using opposite Red Oak and Aberdeen Gbl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Oak 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.| Red Oak vs. Pin Oak Equity | Red Oak vs. White Oak Select | Red Oak vs. Black Oak Emerging | Red Oak vs. Berkshire Focus |
| Aberdeen Gbl vs. Aberdeen Emerging Markets | Aberdeen Gbl vs. Aberdeen Emerging Markets | Aberdeen Gbl vs. Aberdeen Emerging Markets | Aberdeen Gbl vs. Aberdeen Gbl Eq |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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