Correlation Between Applied Finance and Barings Emerging
Can any of the company-specific risk be diversified away by investing in both Applied Finance and Barings Emerging 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 Applied Finance and Barings Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and Barings Emerging Markets, you can compare the effects of market volatilities on Applied Finance and Barings Emerging 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 Applied Finance with a short position of Barings Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Barings Emerging.
Diversification Opportunities for Applied Finance and Barings Emerging
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Applied and Barings is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Barings Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Emerging Markets and Applied Finance 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 Applied Finance Explorer are associated (or correlated) with Barings Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Emerging Markets has no effect on the direction of Applied Finance i.e., Applied Finance and Barings Emerging go up and down completely randomly.
Pair Corralation between Applied Finance and Barings Emerging
Assuming the 90 days horizon Applied Finance Explorer is expected to generate 3.98 times more return on investment than Barings Emerging. However, Applied Finance is 3.98 times more volatile than Barings Emerging Markets. It trades about 0.05 of its potential returns per unit of risk. Barings Emerging Markets is currently generating about 0.06 per unit of risk. If you would invest 1,746 in Applied Finance Explorer on September 3, 2024 and sell it today you would earn a total of 703.00 from holding Applied Finance Explorer or generate 40.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. Barings Emerging Markets
Performance |
| Timeline |
| Applied Finance Explorer |
| Barings Emerging Markets |
Applied Finance and Barings Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Barings Emerging
The main advantage of trading using opposite Applied Finance and Barings Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Barings Emerging 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 Emerging will offset losses from the drop in Barings Emerging's long position.| Applied Finance vs. Barings Emerging Markets | Applied Finance vs. Arrow Managed Futures | Applied Finance vs. Black Oak Emerging | Applied Finance vs. Nasdaq 100 2x Strategy |
| Barings Emerging vs. Ab Small Cap | Barings Emerging vs. Ab Small Cap | Barings Emerging vs. Oklahoma College Savings | Barings Emerging vs. Champlain Small |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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