Correlation Between Barings Active and Barings Global
Can any of the company-specific risk be diversified away by investing in both Barings Active and Barings Global 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 Barings Global 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 Barings Global Credit, you can compare the effects of market volatilities on Barings Active and Barings Global 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 Barings Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Barings Global.
Diversification Opportunities for Barings Active and Barings Global
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Barings and Barings is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Barings Global Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Global Credit 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 Barings Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Global Credit has no effect on the direction of Barings Active i.e., Barings Active and Barings Global go up and down completely randomly.
Pair Corralation between Barings Active and Barings Global
Assuming the 90 days horizon Barings Active is expected to generate 3.58 times less return on investment than Barings Global. But when comparing it to its historical volatility, Barings Active Short is 1.13 times less risky than Barings Global. It trades about 0.08 of its potential returns per unit of risk. Barings Global Credit is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 767.00 in Barings Global Credit on August 28, 2024 and sell it today you would earn a total of 6.00 from holding Barings Global Credit or generate 0.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Active Short vs. Barings Global Credit
Performance |
| Timeline |
| Barings Active Short |
| Barings Global Credit |
Barings Active and Barings Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and Barings Global
The main advantage of trading using opposite Barings Active and Barings Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active position performs unexpectedly, Barings Global 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 Global will offset losses from the drop in Barings Global's long position.| Barings Active vs. Versatile Bond Portfolio | Barings Active vs. Nuveen Minnesota Municipal | Barings Active vs. Ishares Municipal Bond | Barings Active vs. Multisector Bond Sma |
| Barings Global vs. Barings Active Short | Barings Global vs. Barings Emerging Markets | Barings Global vs. Barings Emerging Markets | Barings Global vs. Barings Active Short |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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