Correlation Between Aberdeen Emerging and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Aberdeen Emerging and Emerging Markets 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 Emerging and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberdeen Emerging Markets and Emerging Markets Value, you can compare the effects of market volatilities on Aberdeen Emerging and Emerging Markets 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 Emerging with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Emerging and Emerging Markets.
Diversification Opportunities for Aberdeen Emerging and Emerging Markets
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Aberdeen and Emerging is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Emerging Markets and Emerging Markets Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Value and Aberdeen Emerging 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 Emerging Markets are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Value has no effect on the direction of Aberdeen Emerging i.e., Aberdeen Emerging and Emerging Markets go up and down completely randomly.
Pair Corralation between Aberdeen Emerging and Emerging Markets
Assuming the 90 days horizon Aberdeen Emerging is expected to generate 28.08 times less return on investment than Emerging Markets. In addition to that, Aberdeen Emerging is 1.26 times more volatile than Emerging Markets Value. It trades about 0.0 of its total potential returns per unit of risk. Emerging Markets Value is currently generating about 0.04 per unit of volatility. If you would invest 2,565 in Emerging Markets Value on January 19, 2024 and sell it today you would earn a total of 384.00 from holding Emerging Markets Value or generate 14.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aberdeen Emerging Markets vs. Emerging Markets Value
Performance |
| Timeline |
| Aberdeen Emerging Markets |
| Emerging Markets Value |
Aberdeen Emerging and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberdeen Emerging and Emerging Markets
The main advantage of trading using opposite Aberdeen Emerging and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Emerging position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Aberdeen Emerging vs. Vanguard Emerging Markets | Aberdeen Emerging vs. American Funds New | Aberdeen Emerging vs. American Funds New | Aberdeen Emerging vs. New World Fund |
| Emerging Markets vs. Dfa International Small | Emerging Markets vs. International Small Pany | Emerging Markets vs. Emerging Markets Small | Emerging Markets vs. Dfa International Value |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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