Correlation Between Barings Active and Vest Large
Can any of the company-specific risk be diversified away by investing in both Barings Active and Vest Large 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 Vest Large 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 Vest Large Cap, you can compare the effects of market volatilities on Barings Active and Vest Large 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 Vest Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Vest Large.
Diversification Opportunities for Barings Active and Vest Large
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barings and Vest is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Vest Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vest Large Cap 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 Vest Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vest Large Cap has no effect on the direction of Barings Active i.e., Barings Active and Vest Large go up and down completely randomly.
Pair Corralation between Barings Active and Vest Large
Assuming the 90 days horizon Barings Active Short is expected to generate 0.07 times more return on investment than Vest Large. However, Barings Active Short is 14.42 times less risky than Vest Large. It trades about 0.17 of its potential returns per unit of risk. Vest Large Cap is currently generating about 0.01 per unit of risk. If you would invest 912.00 in Barings Active Short on November 6, 2024 and sell it today you would earn a total of 11.00 from holding Barings Active Short or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Active Short vs. Vest Large Cap
Performance |
| Timeline |
| Barings Active Short |
| Vest Large Cap |
Barings Active and Vest Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and Vest Large
The main advantage of trading using opposite Barings Active and Vest Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active position performs unexpectedly, Vest Large 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 Vest Large will offset losses from the drop in Vest Large's long position.| Barings Active vs. Barings Emerging Markets | Barings Active vs. Barings Global Floating | Barings Active vs. Barings Global Floating | Barings Active vs. Barings Emerging Markets |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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