Correlation Between Barings Active and Inverse Nasdaq-100
Can any of the company-specific risk be diversified away by investing in both Barings Active and Inverse Nasdaq-100 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 Inverse Nasdaq-100 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 Inverse Nasdaq 100 Strategy, you can compare the effects of market volatilities on Barings Active and Inverse Nasdaq-100 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 Inverse Nasdaq-100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Inverse Nasdaq-100.
Diversification Opportunities for Barings Active and Inverse Nasdaq-100
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barings and INVERSE is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Inverse Nasdaq 100 Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Nasdaq 100 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 Inverse Nasdaq-100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Nasdaq 100 has no effect on the direction of Barings Active i.e., Barings Active and Inverse Nasdaq-100 go up and down completely randomly.
Pair Corralation between Barings Active and Inverse Nasdaq-100
Assuming the 90 days horizon Barings Active Short is expected to generate 0.11 times more return on investment than Inverse Nasdaq-100. However, Barings Active Short is 8.79 times less risky than Inverse Nasdaq-100. It trades about 0.08 of its potential returns per unit of risk. Inverse Nasdaq 100 Strategy is currently generating about -0.07 per unit of risk. If you would invest 920.00 in Barings Active Short on August 28, 2024 and sell it today you would earn a total of 2.00 from holding Barings Active Short or generate 0.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Active Short vs. Inverse Nasdaq 100 Strategy
Performance |
| Timeline |
| Barings Active Short |
| Inverse Nasdaq 100 |
Barings Active and Inverse Nasdaq-100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and Inverse Nasdaq-100
The main advantage of trading using opposite Barings Active and Inverse Nasdaq-100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active position performs unexpectedly, Inverse Nasdaq-100 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 Inverse Nasdaq-100 will offset losses from the drop in Inverse Nasdaq-100's long position.| Barings Active vs. Versatile Bond Portfolio | Barings Active vs. Nuveen Minnesota Municipal | Barings Active vs. Ishares Municipal Bond | Barings Active vs. Multisector Bond Sma |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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