Correlation Between Barings Active and Salient Alternative
Can any of the company-specific risk be diversified away by investing in both Barings Active and Salient Alternative 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 Salient Alternative 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 Salient Alternative Beta, you can compare the effects of market volatilities on Barings Active and Salient Alternative 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 Salient Alternative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Salient Alternative.
Diversification Opportunities for Barings Active and Salient Alternative
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Barings and Salient is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Salient Alternative Beta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient Alternative Beta 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 Salient Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient Alternative Beta has no effect on the direction of Barings Active i.e., Barings Active and Salient Alternative go up and down completely randomly.
Pair Corralation between Barings Active and Salient Alternative
Assuming the 90 days horizon Barings Active is expected to generate 2.11 times less return on investment than Salient Alternative. But when comparing it to its historical volatility, Barings Active Short is 5.1 times less risky than Salient Alternative. It trades about 0.23 of its potential returns per unit of risk. Salient Alternative Beta is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,141 in Salient Alternative Beta on August 25, 2024 and sell it today you would earn a total of 97.00 from holding Salient Alternative Beta or generate 8.5% 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. Salient Alternative Beta
Performance |
| Timeline |
| Barings Active Short |
| Salient Alternative Beta |
Barings Active and Salient Alternative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and Salient Alternative
The main advantage of trading using opposite Barings Active and Salient Alternative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active position performs unexpectedly, Salient Alternative 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 Salient Alternative will offset losses from the drop in Salient Alternative's long position.| Barings Active vs. Icon Information Technology | Barings Active vs. Mfs Technology Fund | Barings Active vs. Allianzgi Technology Fund | Barings Active vs. Firsthand Technology Opportunities |
| Salient Alternative vs. Barings Active Short | Salient Alternative vs. Bbh Intermediate Municipal | Salient Alternative vs. Chartwell Short Duration | Salient Alternative vs. Multisector Bond Sma |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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