Correlation Between Abrdn Bloomberg and IPath Bloomberg

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

Diversification Opportunities for Abrdn Bloomberg and IPath Bloomberg

0.98
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Abrdn and IPath is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Abrdn Bloomberg All and IPath Bloomberg Commodity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPath Bloomberg Commodity and Abrdn 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 Abrdn Bloomberg All are associated (or correlated) with IPath Bloomberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IPath Bloomberg Commodity has no effect on the direction of Abrdn Bloomberg i.e., Abrdn Bloomberg and IPath Bloomberg go up and down completely randomly.

Pair Corralation between Abrdn Bloomberg and IPath Bloomberg

Considering the 90-day investment horizon Abrdn Bloomberg All is expected to generate 0.95 times more return on investment than IPath Bloomberg. However, Abrdn Bloomberg All is 1.05 times less risky than IPath Bloomberg. It trades about 0.37 of its potential returns per unit of risk. IPath Bloomberg Commodity is currently generating about 0.32 per unit of risk. If you would invest  3,025  in Abrdn Bloomberg All on December 30, 2023 and sell it today you would earn a total of  130.00  from holding Abrdn Bloomberg All or generate 4.3% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Abrdn Bloomberg All  vs.  IPath Bloomberg Commodity

 Performance 
       Timeline  
Abrdn Bloomberg All 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Abrdn Bloomberg All are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Abrdn Bloomberg is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
IPath Bloomberg Commodity 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in IPath Bloomberg Commodity are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward-looking indicators, IPath Bloomberg is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Abrdn Bloomberg and IPath Bloomberg Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Abrdn Bloomberg and IPath Bloomberg

The main advantage of trading using opposite Abrdn Bloomberg and IPath Bloomberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abrdn Bloomberg position performs unexpectedly, IPath 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 IPath Bloomberg will offset losses from the drop in IPath Bloomberg's long position.
The idea behind Abrdn Bloomberg All and IPath Bloomberg Commodity 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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