Correlation Between Barings Active and Retirement Living
Can any of the company-specific risk be diversified away by investing in both Barings Active and Retirement Living 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 Retirement Living 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 Retirement Living Through, you can compare the effects of market volatilities on Barings Active and Retirement Living 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 Retirement Living. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Retirement Living.
Diversification Opportunities for Barings Active and Retirement Living
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barings and Retirement is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Retirement Living Through in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retirement Living Through 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 Retirement Living. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retirement Living Through has no effect on the direction of Barings Active i.e., Barings Active and Retirement Living go up and down completely randomly.
Pair Corralation between Barings Active and Retirement Living
Assuming the 90 days horizon Barings Active is expected to generate 1.91 times less return on investment than Retirement Living. But when comparing it to its historical volatility, Barings Active Short is 2.85 times less risky than Retirement Living. It trades about 0.22 of its potential returns per unit of risk. Retirement Living Through is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,054 in Retirement Living Through on September 3, 2024 and sell it today you would earn a total of 87.00 from holding Retirement Living Through or generate 8.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Active Short vs. Retirement Living Through
Performance |
| Timeline |
| Barings Active Short |
| Retirement Living Through |
Barings Active and Retirement Living Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and Retirement Living
The main advantage of trading using opposite Barings Active and Retirement Living positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active position performs unexpectedly, Retirement Living 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 Retirement Living will offset losses from the drop in Retirement Living's long position.| Barings Active vs. Blackrock Conservative Prprdptfinstttnl | Barings Active vs. Huber Capital Diversified | Barings Active vs. Delaware Limited Term Diversified | Barings Active vs. Jhancock Diversified Macro |
| Retirement Living vs. Amg Managers Centersquare | Retirement Living vs. Commonwealth Real Estate | Retirement Living vs. Columbia Real Estate | Retirement Living vs. Franklin Real Estate |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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