Correlation Between Small Cap and Aberdeen Global
Can any of the company-specific risk be diversified away by investing in both Small Cap and Aberdeen Global 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 Small Cap and Aberdeen Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Stock and Aberdeen Global Unconstrained, you can compare the effects of market volatilities on Small Cap and Aberdeen Global 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 Small Cap with a short position of Aberdeen Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Aberdeen Global.
Diversification Opportunities for Small Cap and Aberdeen Global
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Small and Aberdeen is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Stock and Aberdeen Global Unconstrained in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Global Unco and Small Cap 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 Small Cap Stock are associated (or correlated) with Aberdeen Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Global Unco has no effect on the direction of Small Cap i.e., Small Cap and Aberdeen Global go up and down completely randomly.
Pair Corralation between Small Cap and Aberdeen Global
Assuming the 90 days horizon Small Cap Stock is expected to generate 6.62 times more return on investment than Aberdeen Global. However, Small Cap is 6.62 times more volatile than Aberdeen Global Unconstrained. It trades about 0.23 of its potential returns per unit of risk. Aberdeen Global Unconstrained is currently generating about 0.04 per unit of risk. If you would invest 1,416 in Small Cap Stock on August 30, 2024 and sell it today you would earn a total of 122.00 from holding Small Cap Stock or generate 8.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Stock vs. Aberdeen Global Unconstrained
Performance |
| Timeline |
| Small Cap Stock |
| Aberdeen Global Unco |
Small Cap and Aberdeen Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Aberdeen Global
The main advantage of trading using opposite Small Cap and Aberdeen Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Aberdeen Global 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 Global will offset losses from the drop in Aberdeen Global's long position.| Small Cap vs. Franklin Adjustable Government | Small Cap vs. Dreyfus Government Cash | Small Cap vs. Lord Abbett Government | Small Cap vs. Inverse Government Long |
| Aberdeen Global vs. Prudential Jennison Financial | Aberdeen Global vs. Ambrus Core Bond | Aberdeen Global vs. John Hancock Money | Aberdeen Global vs. T Rowe Price |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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