Correlation Between Barings Active and Towpath Focus
Can any of the company-specific risk be diversified away by investing in both Barings Active and Towpath Focus 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 Towpath Focus 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 Towpath Focus, you can compare the effects of market volatilities on Barings Active and Towpath Focus 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 Towpath Focus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Towpath Focus.
Diversification Opportunities for Barings Active and Towpath Focus
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Barings and Towpath is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Towpath Focus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Towpath Focus 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 Towpath Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Towpath Focus has no effect on the direction of Barings Active i.e., Barings Active and Towpath Focus go up and down completely randomly.
Pair Corralation between Barings Active and Towpath Focus
Assuming the 90 days horizon Barings Active is expected to generate 17.95 times less return on investment than Towpath Focus. But when comparing it to its historical volatility, Barings Active Short is 5.72 times less risky than Towpath Focus. It trades about 0.09 of its potential returns per unit of risk. Towpath Focus is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,550 in Towpath Focus on September 1, 2024 and sell it today you would earn a total of 61.00 from holding Towpath Focus or generate 3.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Active Short vs. Towpath Focus
Performance |
| Timeline |
| Barings Active Short |
| Towpath Focus |
Barings Active and Towpath Focus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and Towpath Focus
The main advantage of trading using opposite Barings Active and Towpath Focus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active position performs unexpectedly, Towpath Focus 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 Towpath Focus will offset losses from the drop in Towpath Focus' long position.| Barings Active vs. Barings Active Short | Barings Active vs. Barings Emerging Markets | Barings Active vs. Barings Emerging Markets | Barings Active vs. Barings Global Floating |
| Towpath Focus vs. Towpath Technology | Towpath Focus vs. Pimco Income Strategy | Towpath Focus vs. Growth Fund Of | Towpath Focus vs. Westwood Largecap Value |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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