Correlation Between Barings Active and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both Barings Active and Federated Hermes 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 Hermes 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 Hermes Inflation, you can compare the effects of market volatilities on Barings Active and Federated Hermes 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 Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Federated Hermes.
Diversification Opportunities for Barings Active and Federated Hermes
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barings and Federated is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Federated Hermes Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes Inf 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 Hermes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Hermes Inf has no effect on the direction of Barings Active i.e., Barings Active and Federated Hermes go up and down completely randomly.
Pair Corralation between Barings Active and Federated Hermes
Assuming the 90 days horizon Barings Active Short is expected to generate 0.42 times more return on investment than Federated Hermes. However, Barings Active Short is 2.41 times less risky than Federated Hermes. It trades about 0.19 of its potential returns per unit of risk. Federated Hermes Inflation is currently generating about 0.03 per unit of risk. If you would invest 832.00 in Barings Active Short on September 2, 2024 and sell it today you would earn a total of 93.00 from holding Barings Active Short or generate 11.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Active Short vs. Federated Hermes Inflation
Performance |
| Timeline |
| Barings Active Short |
| Federated Hermes Inf |
Barings Active and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and Federated Hermes
The main advantage of trading using opposite Barings Active and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active position performs unexpectedly, Federated Hermes 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 Hermes will offset losses from the drop in Federated Hermes' long position.| Barings Active vs. Calamos Dynamic Convertible | Barings Active vs. Ab Bond Inflation | Barings Active vs. Blrc Sgy Mnp | Barings Active vs. Artisan High Income |
| Federated Hermes vs. Calvert Conservative Allocation | Federated Hermes vs. Aqr Diversified Arbitrage | Federated Hermes vs. Adams Diversified Equity | Federated Hermes vs. American Funds Conservative |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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