Correlation Between Strategic Allocation and Aberdeen Gbl
Can any of the company-specific risk be diversified away by investing in both Strategic Allocation 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 Strategic Allocation and Aberdeen Gbl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Allocation Moderate and Aberdeen Gbl Eq, you can compare the effects of market volatilities on Strategic Allocation 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 Strategic Allocation with a short position of Aberdeen Gbl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Allocation and Aberdeen Gbl.
Diversification Opportunities for Strategic Allocation and Aberdeen Gbl
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Strategic and Aberdeen is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Allocation Moderate 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 Strategic Allocation 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 Strategic Allocation Moderate 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 Strategic Allocation i.e., Strategic Allocation and Aberdeen Gbl go up and down completely randomly.
Pair Corralation between Strategic Allocation and Aberdeen Gbl
Assuming the 90 days horizon Strategic Allocation Moderate is expected to generate 0.53 times more return on investment than Aberdeen Gbl. However, Strategic Allocation Moderate is 1.9 times less risky than Aberdeen Gbl. It trades about 0.16 of its potential returns per unit of risk. Aberdeen Gbl Eq is currently generating about 0.06 per unit of risk. If you would invest 678.00 in Strategic Allocation Moderate on September 13, 2024 and sell it today you would earn a total of 8.00 from holding Strategic Allocation Moderate or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strategic Allocation Moderate vs. Aberdeen Gbl Eq
Performance |
| Timeline |
| Strategic Allocation |
| Aberdeen Gbl Eq |
Strategic Allocation and Aberdeen Gbl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Allocation and Aberdeen Gbl
The main advantage of trading using opposite Strategic Allocation and Aberdeen Gbl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Allocation 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.The idea behind Strategic Allocation Moderate and Aberdeen Gbl Eq pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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