Correlation Between Barings Emerging and American Funds
Can any of the company-specific risk be diversified away by investing in both Barings Emerging and American Funds 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 American Funds 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 American Funds 2015, you can compare the effects of market volatilities on Barings Emerging and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and American Funds.
Diversification Opportunities for Barings Emerging and American Funds
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barings and American is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets and American Funds 2015 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2015 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2015 has no effect on the direction of Barings Emerging i.e., Barings Emerging and American Funds go up and down completely randomly.
Pair Corralation between Barings Emerging and American Funds
Assuming the 90 days horizon Barings Emerging is expected to generate 12.51 times less return on investment than American Funds. In addition to that, Barings Emerging is 1.06 times more volatile than American Funds 2015. It trades about 0.02 of its total potential returns per unit of risk. American Funds 2015 is currently generating about 0.29 per unit of volatility. If you would invest 1,288 in American Funds 2015 on September 4, 2024 and sell it today you would earn a total of 22.00 from holding American Funds 2015 or generate 1.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Barings Emerging Markets vs. American Funds 2015
Performance |
| Timeline |
| Barings Emerging Markets |
| American Funds 2015 |
Barings Emerging and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Emerging and American Funds
The main advantage of trading using opposite Barings Emerging and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Emerging position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Barings Emerging vs. T Rowe Price | Barings Emerging vs. Volumetric Fund Volumetric | Barings Emerging vs. Rbb Fund | Barings Emerging vs. T Rowe Price |
| American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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