Correlation Between Ab Small and Aberdeen Emerging
Can any of the company-specific risk be diversified away by investing in both Ab Small 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 Ab Small and Aberdeen Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Small Cap and Aberdeen Emerging Markets, you can compare the effects of market volatilities on Ab Small 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 Ab Small with a short position of Aberdeen Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Small and Aberdeen Emerging.
Diversification Opportunities for Ab Small and Aberdeen Emerging
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SCYVX and Aberdeen is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap and Aberdeen Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Emerging Markets and Ab Small 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 Ab Small Cap 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 Markets has no effect on the direction of Ab Small i.e., Ab Small and Aberdeen Emerging go up and down completely randomly.
Pair Corralation between Ab Small and Aberdeen Emerging
Assuming the 90 days horizon Ab Small Cap is expected to generate 1.4 times more return on investment than Aberdeen Emerging. However, Ab Small is 1.4 times more volatile than Aberdeen Emerging Markets. It trades about 0.05 of its potential returns per unit of risk. Aberdeen Emerging Markets is currently generating about 0.03 per unit of risk. If you would invest 1,285 in Ab Small Cap on September 14, 2024 and sell it today you would earn a total of 354.00 from holding Ab Small Cap or generate 27.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Small Cap vs. Aberdeen Emerging Markets
Performance |
| Timeline |
| Ab Small Cap |
| Aberdeen Emerging Markets |
Ab Small and Aberdeen Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Small and Aberdeen Emerging
The main advantage of trading using opposite Ab Small and Aberdeen Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Small 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.| Ab Small vs. Small Cap Core | Ab Small vs. Aquagold International | Ab Small vs. Morningstar Unconstrained Allocation | Ab Small vs. Thrivent High Yield |
| Aberdeen Emerging vs. Balanced Fund Investor | Aberdeen Emerging vs. Multimedia Portfolio Multimedia | Aberdeen Emerging vs. Ab Value Fund | Aberdeen Emerging vs. Ab Small Cap |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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