Correlation Between Barings Active and Absolute Convertible
Can any of the company-specific risk be diversified away by investing in both Barings Active and Absolute Convertible 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 Absolute Convertible 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 Absolute Convertible Arbitrage, you can compare the effects of market volatilities on Barings Active and Absolute Convertible 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 Absolute Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Absolute Convertible.
Diversification Opportunities for Barings Active and Absolute Convertible
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barings and Absolute is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Absolute Convertible Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Convertible 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 Absolute Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Convertible has no effect on the direction of Barings Active i.e., Barings Active and Absolute Convertible go up and down completely randomly.
Pair Corralation between Barings Active and Absolute Convertible
Assuming the 90 days horizon Barings Active is expected to generate 1.17 times less return on investment than Absolute Convertible. In addition to that, Barings Active is 2.64 times more volatile than Absolute Convertible Arbitrage. It trades about 0.18 of its total potential returns per unit of risk. Absolute Convertible Arbitrage is currently generating about 0.56 per unit of volatility. If you would invest 1,143 in Absolute Convertible Arbitrage on August 31, 2024 and sell it today you would earn a total of 7.00 from holding Absolute Convertible Arbitrage or generate 0.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Barings Active Short vs. Absolute Convertible Arbitrage
Performance |
| Timeline |
| Barings Active Short |
| Absolute Convertible |
Barings Active and Absolute Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and Absolute Convertible
The main advantage of trading using opposite Barings Active and Absolute Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active position performs unexpectedly, Absolute Convertible 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 Absolute Convertible will offset losses from the drop in Absolute Convertible's long position.| Barings Active vs. Blrc Sgy Mnp | Barings Active vs. Ab Impact Municipal | Barings Active vs. Artisan High Income | Barings Active vs. Maryland Tax Free Bond |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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