Correlation Between Barings Active and Versatile Bond
Can any of the company-specific risk be diversified away by investing in both Barings Active and Versatile Bond 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 Versatile Bond 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 Versatile Bond Portfolio, you can compare the effects of market volatilities on Barings Active and Versatile Bond 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 Versatile Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Versatile Bond.
Diversification Opportunities for Barings Active and Versatile Bond
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Barings and Versatile is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Versatile Bond Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Versatile Bond Portfolio 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 Versatile Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Versatile Bond Portfolio has no effect on the direction of Barings Active i.e., Barings Active and Versatile Bond go up and down completely randomly.
Pair Corralation between Barings Active and Versatile Bond
Assuming the 90 days horizon Barings Active Short is expected to generate 1.24 times more return on investment than Versatile Bond. However, Barings Active is 1.24 times more volatile than Versatile Bond Portfolio. It trades about 0.11 of its potential returns per unit of risk. Versatile Bond Portfolio is currently generating about -0.05 per unit of risk. If you would invest 917.00 in Barings Active Short on August 29, 2024 and sell it today you would earn a total of 3.00 from holding Barings Active Short or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Active Short vs. Versatile Bond Portfolio
Performance |
| Timeline |
| Barings Active Short |
| Versatile Bond Portfolio |
Barings Active and Versatile Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and Versatile Bond
The main advantage of trading using opposite Barings Active and Versatile Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active position performs unexpectedly, Versatile Bond 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 Versatile Bond will offset losses from the drop in Versatile Bond's long position.| Barings Active vs. Permanent Portfolio Class | Barings Active vs. HUMANA INC | Barings Active vs. Aquagold International | Barings Active vs. Barloworld Ltd ADR |
| Versatile Bond vs. Permanent Portfolio Class | Versatile Bond vs. HUMANA INC | Versatile Bond vs. Aquagold International | Versatile Bond vs. Barloworld Ltd ADR |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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