Correlation Between Barings Active and Gmo International
Can any of the company-specific risk be diversified away by investing in both Barings Active and Gmo International 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 Gmo International 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 Gmo International Equity, you can compare the effects of market volatilities on Barings Active and Gmo International 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 Gmo International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Gmo International.
Diversification Opportunities for Barings Active and Gmo International
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barings and Gmo is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Gmo International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo International Equity 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 Gmo International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo International Equity has no effect on the direction of Barings Active i.e., Barings Active and Gmo International go up and down completely randomly.
Pair Corralation between Barings Active and Gmo International
Assuming the 90 days horizon Barings Active Short is expected to generate 0.15 times more return on investment than Gmo International. However, Barings Active Short is 6.57 times less risky than Gmo International. It trades about 0.15 of its potential returns per unit of risk. Gmo International Equity is currently generating about -0.12 per unit of risk. If you would invest 920.00 in Barings Active Short on August 31, 2024 and sell it today you would earn a total of 4.00 from holding Barings Active Short or generate 0.43% 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. Gmo International Equity
Performance |
| Timeline |
| Barings Active Short |
| Gmo International Equity |
Barings Active and Gmo International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and Gmo International
The main advantage of trading using opposite Barings Active and Gmo International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active position performs unexpectedly, Gmo International 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 Gmo International will offset losses from the drop in Gmo International's long position.| Barings Active vs. Blrc Sgy Mnp | Barings Active vs. Ab Impact Municipal | Barings Active vs. Artisan High Income | Barings Active vs. Maryland Tax Free Bond |
| Gmo International vs. Ab Select Longshort | Gmo International vs. Barings Active Short | Gmo International vs. Astor Longshort Fund | Gmo International vs. Jhancock Short Duration |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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