Correlation Between Barings Active and Us Small
Can any of the company-specific risk be diversified away by investing in both Barings Active and Us Small 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 Us Small 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 Us Small Cap, you can compare the effects of market volatilities on Barings Active and Us Small 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 Us Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Us Small.
Diversification Opportunities for Barings Active and Us Small
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Barings and DFSTX is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Us Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Small Cap 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 Us Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Small Cap has no effect on the direction of Barings Active i.e., Barings Active and Us Small go up and down completely randomly.
Pair Corralation between Barings Active and Us Small
Assuming the 90 days horizon Barings Active is expected to generate 2.7 times less return on investment than Us Small. But when comparing it to its historical volatility, Barings Active Short is 7.39 times less risky than Us Small. It trades about 0.17 of its potential returns per unit of risk. Us Small Cap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,834 in Us Small Cap on August 29, 2024 and sell it today you would earn a total of 1,466 from holding Us Small Cap or generate 38.24% 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. Us Small Cap
Performance |
| Timeline |
| Barings Active Short |
| Us Small Cap |
Barings Active and Us Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and Us Small
The main advantage of trading using opposite Barings Active and Us Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active position performs unexpectedly, Us Small 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 Us Small will offset losses from the drop in Us Small's long position.| Barings Active vs. Permanent Portfolio Class | Barings Active vs. HUMANA INC | Barings Active vs. Aquagold International | Barings Active vs. Barloworld Ltd ADR |
| Us Small vs. Ab Select Longshort | Us Small vs. Barings Active Short | Us Small vs. Jhancock Short Duration | Us Small 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |