Correlation Between United States and Abrdn Physical

Can any of the company-specific risk be diversified away by investing in both United States and Abrdn Physical 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 United States and Abrdn Physical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between United States Brent and abrdn Physical Palladium, you can compare the effects of market volatilities on United States and Abrdn Physical 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 United States with a short position of Abrdn Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Abrdn Physical.

Diversification Opportunities for United States and Abrdn Physical

0.48

Correlation Coefficient

United States  Abrdn Physical

Very weak diversification

The 3 months correlation between United and Abrdn is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding United States Brent and abrdn Physical Palladium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on abrdn Physical Palladium and United States 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 United States Brent are associated (or correlated) with Abrdn Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of abrdn Physical Palladium has no effect on the direction of United States i.e., United States and Abrdn Physical go up and down completely randomly.

Pair Corralation between United States and Abrdn Physical

Considering the 90-day investment horizon United States Brent is expected to generate 0.48 times more return on investment than Abrdn Physical. However, United States Brent is 2.1 times less risky than Abrdn Physical. It trades about 0.08 of its potential returns per unit of risk. abrdn Physical Palladium is currently generating about 0.03 per unit of risk. If you would invest  2,963  in United States Brent on February 19, 2024 and sell it today you would earn a total of  162.00  from holding United States Brent or generate 5.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

United States Brent  vs.  abrdn Physical Palladium

United States Brent

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in United States Brent are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, United States is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

abrdn Physical Palladium

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in abrdn Physical Palladium are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Abrdn Physical is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with United States and Abrdn Physical

The main advantage of trading using opposite United States and Abrdn Physical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, Abrdn Physical 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 Physical will offset losses from the drop in Abrdn Physical's long position.

The idea behind United States Brent and abrdn Physical Palladium 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.