Correlation Between Abrdn Physical and United States

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

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

Diversification Opportunities for Abrdn Physical and United States

0.84

Correlation Coefficient

Abrdn Physical  United States

Very poor diversification

The 3 months correlation between Abrdn and United is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding abrdn Physical Precious and United States Brent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Brent and Abrdn Physical 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 Physical Precious are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Brent has no effect on the direction of Abrdn Physical i.e., Abrdn Physical and United States go up and down completely randomly.

Pair Corralation between Abrdn Physical and United States

Given the investment horizon of 90 days abrdn Physical Precious is expected to generate 0.95 times more return on investment than United States. However, abrdn Physical Precious is 1.05 times less risky than United States. It trades about -0.05 of its potential returns per unit of risk. United States Brent is currently generating about -0.31 per unit of risk. If you would invest  10,480  in abrdn Physical Precious on February 15, 2024 and sell it today you would lose (143.00) from holding abrdn Physical Precious or give up 1.36% of portfolio value over 90 days.

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

abrdn Physical Precious  vs.  United States Brent

abrdn Physical Precious

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in abrdn Physical Precious are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Abrdn Physical reported solid returns over the last few months and may actually be approaching a breakup point.

United States Brent

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in United States Brent are ranked lower than 3 (%) 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.

Pair Trading with Abrdn Physical and United States

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

The idea behind abrdn Physical Precious and United States Brent 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.