Correlation Between Barings Active and Vanguard Short-term
Can any of the company-specific risk be diversified away by investing in both Barings Active and Vanguard Short-term 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 Vanguard Short-term 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 Vanguard Short Term Investment Grade, you can compare the effects of market volatilities on Barings Active and Vanguard Short-term 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 Vanguard Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Vanguard Short-term.
Diversification Opportunities for Barings Active and Vanguard Short-term
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Barings and Vanguard is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Vanguard Short Term Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Short Term 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 Vanguard Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Short Term has no effect on the direction of Barings Active i.e., Barings Active and Vanguard Short-term go up and down completely randomly.
Pair Corralation between Barings Active and Vanguard Short-term
Assuming the 90 days horizon Barings Active Short is expected to generate 0.89 times more return on investment than Vanguard Short-term. However, Barings Active Short is 1.12 times less risky than Vanguard Short-term. It trades about 0.08 of its potential returns per unit of risk. Vanguard Short Term Investment Grade is currently generating about -0.12 per unit of risk. If you would invest 920.00 in Barings Active Short on August 27, 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Active Short vs. Vanguard Short Term Investment
Performance |
| Timeline |
| Barings Active Short |
| Vanguard Short Term |
Barings Active and Vanguard Short-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and Vanguard Short-term
The main advantage of trading using opposite Barings Active and Vanguard Short-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active position performs unexpectedly, Vanguard Short-term 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 Vanguard Short-term will offset losses from the drop in Vanguard Short-term'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 |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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