Correlation Between IShares GSCI and Abrdn Bloomberg

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Can any of the company-specific risk be diversified away by investing in both IShares GSCI and Abrdn Bloomberg 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 IShares GSCI and Abrdn Bloomberg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IShares GSCI Commodity and Abrdn Bloomberg All, you can compare the effects of market volatilities on IShares GSCI and Abrdn Bloomberg 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 IShares GSCI with a short position of Abrdn Bloomberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares GSCI and Abrdn Bloomberg.

Diversification Opportunities for IShares GSCI and Abrdn Bloomberg

0.59
  Correlation Coefficient

Very weak diversification

The 3 months correlation between IShares and Abrdn is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding IShares GSCI Commodity and Abrdn Bloomberg All in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abrdn Bloomberg All and IShares GSCI 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 IShares GSCI Commodity are associated (or correlated) with Abrdn Bloomberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abrdn Bloomberg All has no effect on the direction of IShares GSCI i.e., IShares GSCI and Abrdn Bloomberg go up and down completely randomly.

Pair Corralation between IShares GSCI and Abrdn Bloomberg

Given the investment horizon of 90 days IShares GSCI Commodity is expected to generate 1.21 times more return on investment than Abrdn Bloomberg. However, IShares GSCI is 1.21 times more volatile than Abrdn Bloomberg All. It trades about -0.03 of its potential returns per unit of risk. Abrdn Bloomberg All is currently generating about -0.05 per unit of risk. If you would invest  3,314  in IShares GSCI Commodity on December 29, 2023 and sell it today you would lose (645.00) from holding IShares GSCI Commodity or give up 19.46% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

IShares GSCI Commodity  vs.  Abrdn Bloomberg All

 Performance 
       Timeline  
IShares GSCI Commodity 

Risk-Adjusted Performance

11 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in IShares GSCI Commodity are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating primary indicators, IShares GSCI may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Abrdn Bloomberg All 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Abrdn Bloomberg All are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Abrdn Bloomberg is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

IShares GSCI and Abrdn Bloomberg Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IShares GSCI and Abrdn Bloomberg

The main advantage of trading using opposite IShares GSCI and Abrdn Bloomberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares GSCI position performs unexpectedly, Abrdn Bloomberg 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 Abrdn Bloomberg will offset losses from the drop in Abrdn Bloomberg's long position.
The idea behind IShares GSCI Commodity and Abrdn Bloomberg All 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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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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