Correlation Between Target Retirement and Aberdeen China
Can any of the company-specific risk be diversified away by investing in both Target Retirement and Aberdeen China 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 Target Retirement and Aberdeen China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target Retirement 2040 and Aberdeen China Oppty, you can compare the effects of market volatilities on Target Retirement and Aberdeen China 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 Target Retirement with a short position of Aberdeen China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target Retirement and Aberdeen China.
Diversification Opportunities for Target Retirement and Aberdeen China
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Target and Aberdeen is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Target Retirement 2040 and Aberdeen China Oppty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen China Oppty and Target Retirement 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 Target Retirement 2040 are associated (or correlated) with Aberdeen China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen China Oppty has no effect on the direction of Target Retirement i.e., Target Retirement and Aberdeen China go up and down completely randomly.
Pair Corralation between Target Retirement and Aberdeen China
Assuming the 90 days horizon Target Retirement is expected to generate 1.36 times less return on investment than Aberdeen China. But when comparing it to its historical volatility, Target Retirement 2040 is 2.9 times less risky than Aberdeen China. It trades about 0.09 of its potential returns per unit of risk. Aberdeen China Oppty is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,880 in Aberdeen China Oppty on September 1, 2024 and sell it today you would earn a total of 150.00 from holding Aberdeen China Oppty or generate 7.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Target Retirement 2040 vs. Aberdeen China Oppty
Performance |
| Timeline |
| Target Retirement 2040 |
| Aberdeen China Oppty |
Target Retirement and Aberdeen China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Target Retirement and Aberdeen China
The main advantage of trading using opposite Target Retirement and Aberdeen China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target Retirement position performs unexpectedly, Aberdeen China 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 China will offset losses from the drop in Aberdeen China's long position.| Target Retirement vs. Science Technology Fund | Target Retirement vs. Blackrock Science Technology | Target Retirement vs. Fidelity Advisor Technology | Target Retirement vs. Biotechnology Ultrasector Profund |
| Aberdeen China vs. Aberdeen Emerging Markets | Aberdeen China vs. Aberdeen Emerging Markets | Aberdeen China vs. Aberdeen Emerging Markets | Aberdeen China 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |