Correlation Between Barings Active and Financial Industries
Can any of the company-specific risk be diversified away by investing in both Barings Active and Financial Industries 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 Financial Industries 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 Financial Industries Fund, you can compare the effects of market volatilities on Barings Active and Financial Industries 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 Financial Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Financial Industries.
Diversification Opportunities for Barings Active and Financial Industries
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barings and Financial is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Financial Industries Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Industries 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 Financial Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Industries has no effect on the direction of Barings Active i.e., Barings Active and Financial Industries go up and down completely randomly.
Pair Corralation between Barings Active and Financial Industries
Assuming the 90 days horizon Barings Active Short is expected to generate 0.12 times more return on investment than Financial Industries. However, Barings Active Short is 8.05 times less risky than Financial Industries. It trades about 0.26 of its potential returns per unit of risk. Financial Industries Fund is currently generating about -0.15 per unit of risk. If you would invest 920.00 in Barings Active Short on November 27, 2024 and sell it today you would earn a total of 5.00 from holding Barings Active Short or generate 0.54% 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. Financial Industries Fund
Performance |
| Timeline |
| Barings Active Short |
| Financial Industries |
Barings Active and Financial Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and Financial Industries
The main advantage of trading using opposite Barings Active and Financial Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active position performs unexpectedly, Financial Industries 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 Financial Industries will offset losses from the drop in Financial Industries' long position.| Barings Active vs. Glg Intl Small | Barings Active vs. Versatile Bond Portfolio | Barings Active vs. Tfa Alphagen Growth | Barings Active vs. Rbb Fund |
| Financial Industries vs. Ashmore Emerging Markets | Financial Industries vs. Nuveen Small Cap | Financial Industries vs. Astoncrosswind Small Cap | Financial Industries vs. Glg Intl Small |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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