Correlation Between Barings Emerging and Europacific Growth
Can any of the company-specific risk be diversified away by investing in both Barings Emerging and Europacific Growth 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 Europacific Growth 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 Europacific Growth Fund, you can compare the effects of market volatilities on Barings Emerging and Europacific Growth 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 Europacific Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and Europacific Growth.
Diversification Opportunities for Barings Emerging and Europacific Growth
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barings and Europacific is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets and Europacific Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europacific Growth 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 Europacific Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europacific Growth has no effect on the direction of Barings Emerging i.e., Barings Emerging and Europacific Growth go up and down completely randomly.
Pair Corralation between Barings Emerging and Europacific Growth
Assuming the 90 days horizon Barings Emerging Markets is expected to generate 0.39 times more return on investment than Europacific Growth. However, Barings Emerging Markets is 2.56 times less risky than Europacific Growth. It trades about 0.07 of its potential returns per unit of risk. Europacific Growth Fund is currently generating about -0.02 per unit of risk. If you would invest 735.00 in Barings Emerging Markets on August 29, 2024 and sell it today you would earn a total of 22.00 from holding Barings Emerging Markets or generate 2.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Emerging Markets vs. Europacific Growth Fund
Performance |
| Timeline |
| Barings Emerging Markets |
| Europacific Growth |
Barings Emerging and Europacific Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Emerging and Europacific Growth
The main advantage of trading using opposite Barings Emerging and Europacific Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Emerging position performs unexpectedly, Europacific Growth 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 Europacific Growth will offset losses from the drop in Europacific Growth's long position.| Barings Emerging vs. Fidelity New Markets | Barings Emerging vs. HUMANA INC | Barings Emerging vs. Aquagold International | Barings Emerging vs. Barloworld Ltd ADR |
| Europacific Growth vs. Europacific Growth Fund | Europacific Growth vs. Europacific Growth Fund | Europacific Growth vs. Europacific Growth Fund | Europacific Growth vs. Europacific Growth 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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