Correlation Between Barings Active and New Perspective
Can any of the company-specific risk be diversified away by investing in both Barings Active and New Perspective 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 New Perspective 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 New Perspective Fund, you can compare the effects of market volatilities on Barings Active and New Perspective 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 New Perspective. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and New Perspective.
Diversification Opportunities for Barings Active and New Perspective
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Barings and New is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and New Perspective Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Perspective 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 New Perspective. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Perspective has no effect on the direction of Barings Active i.e., Barings Active and New Perspective go up and down completely randomly.
Pair Corralation between Barings Active and New Perspective
Assuming the 90 days horizon Barings Active Short is expected to generate 0.16 times more return on investment than New Perspective. However, Barings Active Short is 6.44 times less risky than New Perspective. It trades about 0.3 of its potential returns per unit of risk. New Perspective Fund is currently generating about 0.04 per unit of risk. If you would invest 923.00 in Barings Active Short on November 28, 2024 and sell it today you would earn a total of 6.00 from holding Barings Active Short or generate 0.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Barings Active Short vs. New Perspective Fund
Performance |
| Timeline |
| Barings Active Short |
| New Perspective |
Barings Active and New Perspective Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and New Perspective
The main advantage of trading using opposite Barings Active and New Perspective positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active position performs unexpectedly, New Perspective 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 New Perspective will offset losses from the drop in New Perspective's long position.| Barings Active vs. Franklin Federal Limited Term | Barings Active vs. Metropolitan West Ultra | Barings Active vs. Jhancock Diversified Macro | Barings Active vs. Investec Emerging Markets |
| New Perspective vs. Doubleline Emerging Markets | New Perspective vs. Ultra Short Fixed Income | New Perspective vs. Rationalrgn Hedged Equity | New Perspective vs. T Rowe Price |
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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