Correlation Between Barings Emerging and Allianzgi International
Can any of the company-specific risk be diversified away by investing in both Barings Emerging and Allianzgi International 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 Allianzgi International 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 Allianzgi International Small Cap, you can compare the effects of market volatilities on Barings Emerging and Allianzgi International 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 Allianzgi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and Allianzgi International.
Diversification Opportunities for Barings Emerging and Allianzgi International
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barings and Allianzgi is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets and Allianzgi International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi International 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 Allianzgi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianzgi International has no effect on the direction of Barings Emerging i.e., Barings Emerging and Allianzgi International go up and down completely randomly.
Pair Corralation between Barings Emerging and Allianzgi International
Assuming the 90 days horizon Barings Emerging Markets is expected to generate 0.5 times more return on investment than Allianzgi International. However, Barings Emerging Markets is 2.0 times less risky than Allianzgi International. It trades about 0.06 of its potential returns per unit of risk. Allianzgi International Small Cap is currently generating about -0.05 per unit of risk. If you would invest 756.00 in Barings Emerging Markets on September 3, 2024 and sell it today you would earn a total of 3.00 from holding Barings Emerging Markets or generate 0.4% 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. Allianzgi International Small
Performance |
| Timeline |
| Barings Emerging Markets |
| Allianzgi International |
Barings Emerging and Allianzgi International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Emerging and Allianzgi International
The main advantage of trading using opposite Barings Emerging and Allianzgi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Emerging position performs unexpectedly, Allianzgi International 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 Allianzgi International will offset losses from the drop in Allianzgi International's long position.| Barings Emerging vs. Ab Small Cap | Barings Emerging vs. Ab Small Cap | Barings Emerging vs. Oklahoma College Savings | Barings Emerging vs. Champlain Small |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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