Correlation Between Barings Active and Madison Core
Can any of the company-specific risk be diversified away by investing in both Barings Active and Madison Core 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 Madison Core 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 Madison Core Bond, you can compare the effects of market volatilities on Barings Active and Madison Core 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 Madison Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Madison Core.
Diversification Opportunities for Barings Active and Madison Core
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barings and Madison is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Madison Core Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Core Bond 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 Madison Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Core Bond has no effect on the direction of Barings Active i.e., Barings Active and Madison Core go up and down completely randomly.
Pair Corralation between Barings Active and Madison Core
Assuming the 90 days horizon Barings Active Short is expected to generate 0.39 times more return on investment than Madison Core. However, Barings Active Short is 2.55 times less risky than Madison Core. It trades about 0.19 of its potential returns per unit of risk. Madison Core Bond is currently generating about 0.04 per unit of risk. If you would invest 814.00 in Barings Active Short on December 12, 2024 and sell it today you would earn a total of 116.00 from holding Barings Active Short or generate 14.25% 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. Madison Core Bond
Performance |
| Timeline |
| Barings Active Short |
| Madison Core Bond |
Barings Active and Madison Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and Madison Core
The main advantage of trading using opposite Barings Active and Madison Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active position performs unexpectedly, Madison Core 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 Madison Core will offset losses from the drop in Madison Core's long position.| Barings Active vs. Metropolitan West Ultra | ||
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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