Correlation Between Barings Emerging and Sierra E
Can any of the company-specific risk be diversified away by investing in both Barings Emerging and Sierra E 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 Emerging and Sierra E into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings Emerging Markets and Sierra E Retirement, you can compare the effects of market volatilities on Barings Emerging and Sierra E 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 Emerging with a short position of Sierra E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and Sierra E.
Diversification Opportunities for Barings Emerging and Sierra E
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Barings and Sierra is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets and Sierra E Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sierra E Retirement and Barings Emerging 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 Emerging Markets are associated (or correlated) with Sierra E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sierra E Retirement has no effect on the direction of Barings Emerging i.e., Barings Emerging and Sierra E go up and down completely randomly.
Pair Corralation between Barings Emerging and Sierra E
Assuming the 90 days horizon Barings Emerging Markets is expected to generate about the same return on investment as Sierra E Retirement. However, Barings Emerging is 1.07 times more volatile than Sierra E Retirement. It trades about 0.08 of its potential returns per unit of risk. Sierra E Retirement is currently producing about 0.08 per unit of risk. If you would invest 2,241 in Sierra E Retirement on September 1, 2024 and sell it today you would earn a total of 77.00 from holding Sierra E Retirement or generate 3.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Barings Emerging Markets vs. Sierra E Retirement
Performance |
| Timeline |
| Barings Emerging Markets |
| Sierra E Retirement |
Barings Emerging and Sierra E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Emerging and Sierra E
The main advantage of trading using opposite Barings Emerging and Sierra E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Emerging position performs unexpectedly, Sierra E 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 Sierra E will offset losses from the drop in Sierra E's long position.| Barings Emerging vs. Barings Active Short | Barings Emerging vs. Barings Emerging Markets | Barings Emerging vs. Barings Active Short | Barings Emerging vs. Barings Global Floating |
| Sierra E vs. Versatile Bond Portfolio | Sierra E vs. Federated Ohio Municipal | Sierra E vs. Ab Impact Municipal | Sierra E vs. Thrivent Income Fund |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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