Correlation Between Barings Active and Multisector Bond
Can any of the company-specific risk be diversified away by investing in both Barings Active and Multisector Bond 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 Multisector Bond 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 Multisector Bond Sma, you can compare the effects of market volatilities on Barings Active and Multisector Bond 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 Multisector Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Multisector Bond.
Diversification Opportunities for Barings Active and Multisector Bond
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Barings and Multisector is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Multisector Bond Sma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multisector Bond Sma 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 Multisector Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multisector Bond Sma has no effect on the direction of Barings Active i.e., Barings Active and Multisector Bond go up and down completely randomly.
Pair Corralation between Barings Active and Multisector Bond
Assuming the 90 days horizon Barings Active is expected to generate 1.47 times less return on investment than Multisector Bond. But when comparing it to its historical volatility, Barings Active Short is 2.77 times less risky than Multisector Bond. It trades about 0.23 of its potential returns per unit of risk. Multisector Bond Sma is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,207 in Multisector Bond Sma on August 24, 2024 and sell it today you would earn a total of 153.00 from holding Multisector Bond Sma or generate 12.68% 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. Multisector Bond Sma
Performance |
| Timeline |
| Barings Active Short |
| Multisector Bond Sma |
Barings Active and Multisector Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and Multisector Bond
The main advantage of trading using opposite Barings Active and Multisector Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active position performs unexpectedly, Multisector Bond 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 Multisector Bond will offset losses from the drop in Multisector Bond's long position.| Barings Active vs. Vanguard Institutional Short Term | Barings Active vs. Jhancock Short Duration | Barings Active vs. Locorr Longshort Modities | Barings Active vs. Astor Longshort Fund |
| Multisector Bond vs. Teton Vertible Securities | Multisector Bond vs. Invesco Vertible Securities | Multisector Bond vs. Lord Abbett Vertible | Multisector Bond vs. Lord Abbett Vertible |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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