Correlation Between Barings Active and Royce Opportunity
Can any of the company-specific risk be diversified away by investing in both Barings Active and Royce Opportunity 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 Royce Opportunity 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 Royce Opportunity Fund, you can compare the effects of market volatilities on Barings Active and Royce Opportunity 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 Royce Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Royce Opportunity.
Diversification Opportunities for Barings Active and Royce Opportunity
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barings and Royce is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Royce Opportunity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royce Opportunity 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 Royce Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royce Opportunity has no effect on the direction of Barings Active i.e., Barings Active and Royce Opportunity go up and down completely randomly.
Pair Corralation between Barings Active and Royce Opportunity
Assuming the 90 days horizon Barings Active Short is expected to generate 0.09 times more return on investment than Royce Opportunity. However, Barings Active Short is 11.36 times less risky than Royce Opportunity. It trades about 0.25 of its potential returns per unit of risk. Royce Opportunity Fund is currently generating about -0.2 per unit of risk. If you would invest 920.00 in Barings Active Short on November 28, 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Active Short vs. Royce Opportunity Fund
Performance |
| Timeline |
| Barings Active Short |
| Royce Opportunity |
Barings Active and Royce Opportunity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and Royce Opportunity
The main advantage of trading using opposite Barings Active and Royce Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active position performs unexpectedly, Royce Opportunity 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 Royce Opportunity will offset losses from the drop in Royce Opportunity's long position.| Barings Active vs. Deutsche Gold Precious | Barings Active vs. Invesco Gold Special | Barings Active vs. First Eagle Gold | Barings Active vs. Global Gold Fund |
| Royce Opportunity vs. Payden High Income | Royce Opportunity vs. Calvert High Yield | Royce Opportunity vs. Msift High Yield | Royce Opportunity vs. Voya High Yield |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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