Correlation Between Aberdeen Japan and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Aberdeen Japan and Dow Jones 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 Aberdeen Japan and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberdeen Japan Equity and Dow Jones Industrial, you can compare the effects of market volatilities on Aberdeen Japan and Dow Jones 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 Aberdeen Japan with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Japan and Dow Jones.
Diversification Opportunities for Aberdeen Japan and Dow Jones
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Aberdeen and Dow is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Japan Equity and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Aberdeen Japan 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 Aberdeen Japan Equity are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Aberdeen Japan i.e., Aberdeen Japan and Dow Jones go up and down completely randomly.
Pair Corralation between Aberdeen Japan and Dow Jones
Assuming the 90 days horizon Aberdeen Japan Equity is expected to under-perform the Dow Jones. But the mutual fund apears to be less risky and, when comparing its historical volatility, Aberdeen Japan Equity is 1.14 times less risky than Dow Jones. The mutual fund trades about -0.31 of its potential returns per unit of risk. The Dow Jones Industrial is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 4,371,748 in Dow Jones Industrial on October 17, 2024 and sell it today you would lose (49,593) from holding Dow Jones Industrial or give up 1.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Aberdeen Japan Equity vs. Dow Jones Industrial
Performance |
| Timeline |
Aberdeen Japan and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Aberdeen Japan Equity
Pair trading matchups for Aberdeen Japan
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Aberdeen Japan and Dow Jones
The main advantage of trading using opposite Aberdeen Japan and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Japan position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Aberdeen Japan vs. Oklahoma Municipal Fund | Aberdeen Japan vs. Franklin Government Money | Aberdeen Japan vs. Leader Short Term Bond | Aberdeen Japan vs. Dws Government Money |
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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 Stocks Directory module to find actively traded stocks across global markets.
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