Correlation Between Barings Active and Transamerica Intl
Can any of the company-specific risk be diversified away by investing in both Barings Active and Transamerica Intl 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 Transamerica Intl 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 Transamerica Intl Equity, you can compare the effects of market volatilities on Barings Active and Transamerica Intl 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 Transamerica Intl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Transamerica Intl.
Diversification Opportunities for Barings Active and Transamerica Intl
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barings and Transamerica is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Transamerica Intl Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Intl Equity 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 Transamerica Intl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Intl Equity has no effect on the direction of Barings Active i.e., Barings Active and Transamerica Intl go up and down completely randomly.
Pair Corralation between Barings Active and Transamerica Intl
Assuming the 90 days horizon Barings Active is expected to generate 8.53 times less return on investment than Transamerica Intl. But when comparing it to its historical volatility, Barings Active Short is 7.75 times less risky than Transamerica Intl. It trades about 0.26 of its potential returns per unit of risk. Transamerica Intl Equity is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 2,159 in Transamerica Intl Equity on November 27, 2024 and sell it today you would earn a total of 101.00 from holding Transamerica Intl Equity or generate 4.68% 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. Transamerica Intl Equity
Performance |
| Timeline |
| Barings Active Short |
| Transamerica Intl Equity |
Barings Active and Transamerica Intl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and Transamerica Intl
The main advantage of trading using opposite Barings Active and Transamerica Intl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active position performs unexpectedly, Transamerica Intl 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 Transamerica Intl will offset losses from the drop in Transamerica Intl's 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 |
| Transamerica Intl vs. Jhancock Diversified Macro | Transamerica Intl vs. Franklin Federal Limited Term | Transamerica Intl vs. Calvert Developed Market | Transamerica Intl vs. Gmo Emerging Markets |
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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