Correlation Between ETRACS Bloomberg and Abrdn Bloomberg

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

Diversification Opportunities for ETRACS Bloomberg and Abrdn Bloomberg

0.95
  Correlation Coefficient

Almost no diversification

The 3 months correlation between ETRACS and Abrdn is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS Bloomberg 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 ETRACS 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 ETRACS Bloomberg 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 ETRACS Bloomberg i.e., ETRACS Bloomberg and Abrdn Bloomberg go up and down completely randomly.

Pair Corralation between ETRACS Bloomberg and Abrdn Bloomberg

Given the investment horizon of 90 days ETRACS Bloomberg Commodity is expected to generate 4.09 times more return on investment than Abrdn Bloomberg. However, ETRACS Bloomberg is 4.09 times more volatile than abrdn Bloomberg All. It trades about 0.21 of its potential returns per unit of risk. abrdn Bloomberg All is currently generating about 0.34 per unit of risk. If you would invest  2,045  in ETRACS Bloomberg Commodity on January 29, 2024 and sell it today you would earn a total of  166.00  from holding ETRACS Bloomberg Commodity or generate 8.12% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

ETRACS Bloomberg Commodity  vs.  abrdn Bloomberg All

 Performance 
       Timeline  
ETRACS Bloomberg Com 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in ETRACS Bloomberg Commodity are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, ETRACS Bloomberg may actually be approaching a critical reversion point that can send shares even higher in May 2024.
abrdn Bloomberg All 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in abrdn Bloomberg All are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Abrdn Bloomberg may actually be approaching a critical reversion point that can send shares even higher in May 2024.

ETRACS Bloomberg and Abrdn Bloomberg Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ETRACS Bloomberg and Abrdn Bloomberg

The main advantage of trading using opposite ETRACS Bloomberg and Abrdn Bloomberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS 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 ETRACS Bloomberg 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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