Correlation Between Barings Active and Capital World
Can any of the company-specific risk be diversified away by investing in both Barings Active and Capital World 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 Capital World 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 Capital World Growth, you can compare the effects of market volatilities on Barings Active and Capital World 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 Capital World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Capital World.
Diversification Opportunities for Barings Active and Capital World
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Barings and Capital is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Capital World Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital World Growth 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 Capital World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital World Growth has no effect on the direction of Barings Active i.e., Barings Active and Capital World go up and down completely randomly.
Pair Corralation between Barings Active and Capital World
Assuming the 90 days horizon Barings Active is expected to generate 2.46 times less return on investment than Capital World. But when comparing it to its historical volatility, Barings Active Short is 4.71 times less risky than Capital World. It trades about 0.16 of its potential returns per unit of risk. Capital World Growth is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,023 in Capital World Growth on August 24, 2024 and sell it today you would earn a total of 1,796 from holding Capital World Growth or generate 35.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Active Short vs. Capital World Growth
Performance |
| Timeline |
| Barings Active Short |
| Capital World Growth |
Barings Active and Capital World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and Capital World
The main advantage of trading using opposite Barings Active and Capital World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active position performs unexpectedly, Capital World 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 Capital World will offset losses from the drop in Capital World's long position.| Barings Active vs. Vanguard Institutional Short Term | Barings Active vs. Jhancock Short Duration | Barings Active vs. Locorr Longshort Modities | Barings Active vs. Astor Longshort Fund |
| Capital World vs. Barings Active Short | Capital World vs. Locorr Longshort Modities | Capital World vs. Old Westbury Short Term | Capital World vs. Aqr Long Short Equity |
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 Stocks Directory module to find actively traded stocks across global markets.
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