Correlation Between Barings Active and American Funds
Can any of the company-specific risk be diversified away by investing in both Barings Active and American Funds 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 American Funds 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 American Funds New, you can compare the effects of market volatilities on Barings Active and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and American Funds.
Diversification Opportunities for Barings Active and American Funds
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Barings and American is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and American Funds New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds New 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds New has no effect on the direction of Barings Active i.e., Barings Active and American Funds go up and down completely randomly.
Pair Corralation between Barings Active and American Funds
Assuming the 90 days horizon Barings Active Short is expected to generate 0.16 times more return on investment than American Funds. However, Barings Active Short is 6.15 times less risky than American Funds. It trades about 0.23 of its potential returns per unit of risk. American Funds New is currently generating about 0.02 per unit of risk. If you would invest 891.00 in Barings Active Short on September 1, 2024 and sell it today you would earn a total of 34.00 from holding Barings Active Short or generate 3.82% 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. American Funds New
Performance |
| Timeline |
| Barings Active Short |
| American Funds New |
Barings Active and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and American Funds
The main advantage of trading using opposite Barings Active and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Barings Active vs. Ab Bond Inflation | Barings Active vs. Western Asset Inflation | Barings Active vs. Blackrock Inflation Protected | Barings Active vs. Aqr Managed Futures |
| American Funds vs. Morgan Stanley Global | American Funds vs. Artisan Global Unconstrained | American Funds vs. Kinetics Global Fund | American Funds vs. Barings Global Floating |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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