Correlation Between IShares Bloomberg and Abrdn Bloomberg

Can any of the company-specific risk be diversified away by investing in both IShares Bloomberg 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 Bloomberg 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 Bloomberg Roll and abrdn Bloomberg All, you can compare the effects of market volatilities on IShares Bloomberg 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 Bloomberg with a short position of Abrdn Bloomberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Bloomberg and Abrdn Bloomberg.

Diversification Opportunities for IShares Bloomberg and Abrdn Bloomberg

1.0

Correlation Coefficient

IShares Bloomberg  Abrdn Bloomberg

No risk reduction

The 3 months correlation between IShares and Abrdn is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Bloomberg Roll 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 Bloomberg 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 Bloomberg Roll 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 Bloomberg i.e., IShares Bloomberg and Abrdn Bloomberg go up and down completely randomly.

Pair Corralation between IShares Bloomberg and Abrdn Bloomberg

Given the investment horizon of 90 days iShares Bloomberg Roll is expected to generate 0.97 times more return on investment than Abrdn Bloomberg. However, iShares Bloomberg Roll is 1.03 times less risky than Abrdn Bloomberg. It trades about 0.0 of its potential returns per unit of risk. abrdn Bloomberg All is currently generating about -0.03 per unit of risk. If you would invest  4,916  in iShares Bloomberg Roll on February 4, 2024 and sell it today you would lose (1.00) from holding iShares Bloomberg Roll or give up 0.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.65%
Values	Daily Returns

iShares Bloomberg Roll  vs.  abrdn Bloomberg All

iShares Bloomberg Roll

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Bloomberg Roll are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, IShares Bloomberg may actually be approaching a critical reversion point that can send shares even higher in June 2024.

abrdn Bloomberg All

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in abrdn Bloomberg All are ranked lower than 13 (%) 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 current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with IShares Bloomberg and Abrdn Bloomberg

The main advantage of trading using opposite IShares Bloomberg and Abrdn Bloomberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Bloomberg 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 Bloomberg Roll 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.