Correlation Between Emerging Markets and Barings Active
Can any of the company-specific risk be diversified away by investing in both Emerging Markets and Barings Active 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 Emerging Markets and Barings Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerging Markets Debt and Barings Active Short, you can compare the effects of market volatilities on Emerging Markets and Barings Active 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 Emerging Markets with a short position of Barings Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Barings Active.
Diversification Opportunities for Emerging Markets and Barings Active
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Emerging and Barings is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Debt and Barings Active Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Active Short and Emerging Markets 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 Emerging Markets Debt are associated (or correlated) with Barings Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Active Short has no effect on the direction of Emerging Markets i.e., Emerging Markets and Barings Active go up and down completely randomly.
Pair Corralation between Emerging Markets and Barings Active
Assuming the 90 days horizon Emerging Markets Debt is expected to generate 3.94 times more return on investment than Barings Active. However, Emerging Markets is 3.94 times more volatile than Barings Active Short. It trades about 0.19 of its potential returns per unit of risk. Barings Active Short is currently generating about 0.35 per unit of risk. If you would invest 875.00 in Emerging Markets Debt on December 4, 2024 and sell it today you would earn a total of 10.00 from holding Emerging Markets Debt or generate 1.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerging Markets Debt vs. Barings Active Short
Performance |
| Timeline |
| Emerging Markets Debt |
| Barings Active Short |
Emerging Markets and Barings Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerging Markets and Barings Active
The main advantage of trading using opposite Emerging Markets and Barings Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets position performs unexpectedly, Barings Active 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 Barings Active will offset losses from the drop in Barings Active's long position.| Emerging Markets vs. Harbor Vertible Securities | Emerging Markets vs. Calamos Vertible Fund | Emerging Markets vs. Franklin Vertible Securities | Emerging Markets vs. The Gamco Global |
| Barings Active vs. Intal High Relative | Barings Active vs. Msift High Yield | Barings Active vs. Goldman Sachs High | Barings Active vs. Siit High Yield |
Check out your portfolio center.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 Global Correlations module to find global opportunities by holding instruments from different markets.
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