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 Oil, 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

0.24

Correlation Coefficient

Abrdn Physical  United States

Modest diversification

The 3 months correlation between Abrdn and United is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding abrdn Physical Precious and United States Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Oil 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 Oil 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 is expected to generate 2.03 times less return on investment than United States. But when comparing it to its historical volatility, abrdn Physical Precious is 1.68 times less risky than United States. It trades about 0.03 of its potential returns per unit of risk. United States Oil is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  7,088  in United States Oil on September 14, 2024 and sell it today you would earn a total of  233.00  from holding United States Oil or generate 3.29% return on investment over 90 days.

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

abrdn Physical Precious  vs.  United States Oil

abrdn Physical Precious

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in abrdn Physical Precious are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Abrdn Physical is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

United States Oil

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in United States Oil are ranked lower than 2 (%) 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 current 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 Oil 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.