Correlation Between Barings Active and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Barings Active and Emerging Markets 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 Barings Active and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings Active Short and Emerging Markets Debt, you can compare the effects of market volatilities on Barings Active and Emerging Markets 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 Barings Active with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Emerging Markets.
Diversification Opportunities for Barings Active and Emerging Markets
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Barings and Emerging is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Emerging Markets Debt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Debt and Barings Active 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 Barings Active Short are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Debt has no effect on the direction of Barings Active i.e., Barings Active and Emerging Markets go up and down completely randomly.
Pair Corralation between Barings Active and Emerging Markets
Assuming the 90 days horizon Barings Active Short is expected to generate 0.46 times more return on investment than Emerging Markets. However, Barings Active Short is 2.16 times less risky than Emerging Markets. It trades about 0.24 of its potential returns per unit of risk. Emerging Markets Debt is currently generating about 0.09 per unit of risk. If you would invest 846.00 in Barings Active Short on September 14, 2024 and sell it today you would earn a total of 79.00 from holding Barings Active Short or generate 9.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Barings Active Short vs. Emerging Markets Debt
Performance |
| Timeline |
| Barings Active Short |
| Emerging Markets Debt |
Barings Active and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and Emerging Markets
The main advantage of trading using opposite Barings Active and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Barings Active vs. Champlain Small | Barings Active vs. Franklin Small Cap | Barings Active vs. Touchstone Small Cap | Barings Active vs. Df Dent Small |
| Emerging Markets vs. Barings Active Short | Emerging Markets vs. Prudential Short Duration | Emerging Markets vs. Blackrock Short Term Inflat Protected | Emerging Markets vs. Angel Oak Ultrashort |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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