Correlation Between Blackrock Enhanced and Aberdeen Standard

Can any of the company-specific risk be diversified away by investing in both Blackrock Enhanced and Aberdeen Standard 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 Blackrock Enhanced and Aberdeen Standard into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Blackrock Enhanced Equity and Aberdeen Standard Global, you can compare the effects of market volatilities on Blackrock Enhanced and Aberdeen Standard 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 Blackrock Enhanced with a short position of Aberdeen Standard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Enhanced and Aberdeen Standard.

Diversification Opportunities for Blackrock Enhanced and Aberdeen Standard

0.16

Correlation Coefficient

Blackrock Enhanced  Aberdeen Standard

Average diversification

The 3 months correlation between Blackrock and Aberdeen is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Enhanced Equity and Aberdeen Standard Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Standard Global and Blackrock Enhanced 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 Blackrock Enhanced Equity are associated (or correlated) with Aberdeen Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Standard Global has no effect on the direction of Blackrock Enhanced i.e., Blackrock Enhanced and Aberdeen Standard go up and down completely randomly.

Pair Corralation between Blackrock Enhanced and Aberdeen Standard

Considering the 90-day investment horizon Blackrock Enhanced is expected to generate 1.64 times less return on investment than Aberdeen Standard. But when comparing it to its historical volatility, Blackrock Enhanced Equity is 1.07 times less risky than Aberdeen Standard. It trades about 0.05 of its potential returns per unit of risk. Aberdeen Standard Global is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,479  in Aberdeen Standard Global on September 1, 2024 and sell it today you would earn a total of  507.00  from holding Aberdeen Standard Global or generate 34.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Blackrock Enhanced Equity  vs.  Aberdeen Standard Global

Blackrock Enhanced Equity

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Enhanced Equity are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively weak fundamental indicators, Blackrock Enhanced may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Aberdeen Standard Global

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Standard Global are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong technical and fundamental indicators, Aberdeen Standard is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Blackrock Enhanced and Aberdeen Standard

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

The idea behind Blackrock Enhanced Equity and Aberdeen Standard Global 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.