Correlation Between Barings Active and Federated Government
Can any of the company-specific risk be diversified away by investing in both Barings Active and Federated Government 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 Federated Government 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 Federated Government Ultrashort, you can compare the effects of market volatilities on Barings Active and Federated Government 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 Federated Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Federated Government.
Diversification Opportunities for Barings Active and Federated Government
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Barings and FEDERATED is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Federated Government Ultrashor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Government 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 Federated Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Government has no effect on the direction of Barings Active i.e., Barings Active and Federated Government go up and down completely randomly.
Pair Corralation between Barings Active and Federated Government
Assuming the 90 days horizon Barings Active is expected to generate 1.14 times less return on investment than Federated Government. In addition to that, Barings Active is 1.36 times more volatile than Federated Government Ultrashort. It trades about 0.15 of its total potential returns per unit of risk. Federated Government Ultrashort is currently generating about 0.23 per unit of volatility. If you would invest 863.00 in Federated Government Ultrashort on November 1, 2024 and sell it today you would earn a total of 118.00 from holding Federated Government Ultrashort or generate 13.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Active Short vs. Federated Government Ultrashor
Performance |
| Timeline |
| Barings Active Short |
| Federated Government |
Barings Active and Federated Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and Federated Government
The main advantage of trading using opposite Barings Active and Federated Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active position performs unexpectedly, Federated Government 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 Federated Government will offset losses from the drop in Federated Government's long position.| Barings Active vs. Stone Ridge Diversified | Barings Active vs. Transamerica Asset Allocation | Barings Active vs. Vy T Rowe | Barings Active vs. Valic Company I |
| Federated Government vs. Artisan High Income | Federated Government vs. T Rowe Price | Federated Government vs. Lord Abbett Short | Federated Government vs. Strategic Advisers Income |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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