Correlation Between Aberdeen Global and Microsoft

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

Diversification Opportunities for Aberdeen Global and Microsoft

0.05
  Correlation Coefficient

Significant diversification

The 3 months correlation between Aberdeen and Microsoft is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Global Premier and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and Aberdeen Global 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 Global Premier are associated (or correlated) with Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Aberdeen Global i.e., Aberdeen Global and Microsoft go up and down completely randomly.

Pair Corralation between Aberdeen Global and Microsoft

Considering the 90-day investment horizon Aberdeen Global Premier is expected to under-perform the Microsoft. But the fund apears to be less risky and, when comparing its historical volatility, Aberdeen Global Premier is 1.08 times less risky than Microsoft. The fund trades about -0.02 of its potential returns per unit of risk. The Microsoft is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  25,730  in Microsoft on December 30, 2023 and sell it today you would earn a total of  13,215  from holding Microsoft or generate 51.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy97.82%
ValuesDaily Returns

Aberdeen Global Premier  vs.  Microsoft

 Performance 
       Timeline  
Aberdeen Global Premier 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Global Premier are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively invariable basic indicators, Aberdeen Global is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.
Microsoft 

Risk-Adjusted Performance

14 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Microsoft reported solid returns over the last few months and may actually be approaching a breakup point.

Aberdeen Global and Microsoft Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aberdeen Global and Microsoft

The main advantage of trading using opposite Aberdeen Global and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Global position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.
The idea behind Aberdeen Global Premier and Microsoft 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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