Correlation Between Emerging Markets and Aberdeen Select
Can any of the company-specific risk be diversified away by investing in both Emerging Markets and Aberdeen Select 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 Emerging Markets and Aberdeen Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerging Markets Fund and Aberdeen Select International, you can compare the effects of market volatilities on Emerging Markets and Aberdeen Select 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 Emerging Markets with a short position of Aberdeen Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Aberdeen Select.
Diversification Opportunities for Emerging Markets and Aberdeen Select
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Emerging and Aberdeen is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Fund and Aberdeen Select International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Select Inte and Emerging Markets 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 Emerging Markets Fund are associated (or correlated) with Aberdeen Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Select Inte has no effect on the direction of Emerging Markets i.e., Emerging Markets and Aberdeen Select go up and down completely randomly.
Pair Corralation between Emerging Markets and Aberdeen Select
Assuming the 90 days horizon Emerging Markets Fund is expected to generate 1.13 times more return on investment than Aberdeen Select. However, Emerging Markets is 1.13 times more volatile than Aberdeen Select International. It trades about 0.04 of its potential returns per unit of risk. Aberdeen Select International is currently generating about 0.02 per unit of risk. If you would invest 954.00 in Emerging Markets Fund on August 24, 2024 and sell it today you would earn a total of 174.00 from holding Emerging Markets Fund or generate 18.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerging Markets Fund vs. Aberdeen Select International
Performance |
| Timeline |
| Emerging Markets |
| Aberdeen Select Inte |
Emerging Markets and Aberdeen Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerging Markets and Aberdeen Select
The main advantage of trading using opposite Emerging Markets and Aberdeen Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets position performs unexpectedly, Aberdeen Select 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 Select will offset losses from the drop in Aberdeen Select's long position.| Emerging Markets vs. Heritage Fund Investor | Emerging Markets vs. Real Estate Fund | Emerging Markets vs. Global Growth Fund | Emerging Markets vs. Utilities Fund Investor |
| Aberdeen Select vs. Emerging Markets Fund | Aberdeen Select vs. International Growth Fund | Aberdeen Select vs. Heritage Fund Investor | Aberdeen Select vs. Select Fund Investor |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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