Correlation Between Barings Emerging and New Jersey
Can any of the company-specific risk be diversified away by investing in both Barings Emerging and New Jersey 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 New Jersey 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 New Jersey Tax Free, you can compare the effects of market volatilities on Barings Emerging and New Jersey 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 New Jersey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and New Jersey.
Diversification Opportunities for Barings Emerging and New Jersey
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barings and New is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets and New Jersey Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Jersey Tax 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 New Jersey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Jersey Tax has no effect on the direction of Barings Emerging i.e., Barings Emerging and New Jersey go up and down completely randomly.
Pair Corralation between Barings Emerging and New Jersey
Assuming the 90 days horizon Barings Emerging Markets is expected to generate 1.67 times more return on investment than New Jersey. However, Barings Emerging is 1.67 times more volatile than New Jersey Tax Free. It trades about 0.12 of its potential returns per unit of risk. New Jersey Tax Free is currently generating about 0.18 per unit of risk. If you would invest 680.00 in Barings Emerging Markets on September 1, 2024 and sell it today you would earn a total of 80.00 from holding Barings Emerging Markets or generate 11.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Barings Emerging Markets vs. New Jersey Tax Free
Performance |
| Timeline |
| Barings Emerging Markets |
| New Jersey Tax |
Barings Emerging and New Jersey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Emerging and New Jersey
The main advantage of trading using opposite Barings Emerging and New Jersey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Emerging position performs unexpectedly, New Jersey 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 New Jersey will offset losses from the drop in New Jersey'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 |
| New Jersey vs. T Rowe Price | New Jersey vs. T Rowe Price | New Jersey vs. T Rowe Price | New Jersey vs. T Rowe Price |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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