Correlation Between Abrdn Bloomberg and IShares GSCI

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

Diversification Opportunities for Abrdn Bloomberg and IShares GSCI

0.86

Correlation Coefficient

Abrdn Bloomberg  IShares GSCI

Very poor diversification

The 3 months correlation between Abrdn and IShares is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding abrdn Bloomberg All and iShares GSCI Commodity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares GSCI 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 IShares GSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares GSCI Commodity has no effect on the direction of Abrdn Bloomberg i.e., Abrdn Bloomberg and IShares GSCI go up and down completely randomly.

Pair Corralation between Abrdn Bloomberg and IShares GSCI

Considering the 90-day investment horizon abrdn Bloomberg All is expected to generate 0.64 times more return on investment than IShares GSCI. However, abrdn Bloomberg All is 1.56 times less risky than IShares GSCI. It trades about 0.06 of its potential returns per unit of risk. iShares GSCI Commodity is currently generating about 0.01 per unit of risk. If you would invest  3,129  in abrdn Bloomberg All on August 30, 2024 and sell it today you would earn a total of  86.00  from holding abrdn Bloomberg All or generate 2.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

abrdn Bloomberg All  vs.  iShares GSCI Commodity

abrdn Bloomberg All

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in abrdn Bloomberg All are ranked lower than 4 (%) 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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

iShares GSCI Commodity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares GSCI Commodity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, IShares GSCI is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Abrdn Bloomberg and IShares GSCI

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

The idea behind abrdn Bloomberg All and iShares GSCI 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.