Correlation Between Barings Emerging and Short Duration
Can any of the company-specific risk be diversified away by investing in both Barings Emerging and Short Duration 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 Short Duration 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 Short Duration Inflation, you can compare the effects of market volatilities on Barings Emerging and Short Duration 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 Short Duration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and Short Duration.
Diversification Opportunities for Barings Emerging and Short Duration
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Barings and Short is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets and Short Duration Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Duration Inflation 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 Short Duration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Duration Inflation has no effect on the direction of Barings Emerging i.e., Barings Emerging and Short Duration go up and down completely randomly.
Pair Corralation between Barings Emerging and Short Duration
Assuming the 90 days horizon Barings Emerging Markets is expected to generate 2.22 times more return on investment than Short Duration. However, Barings Emerging is 2.22 times more volatile than Short Duration Inflation. It trades about 0.08 of its potential returns per unit of risk. Short Duration Inflation is currently generating about 0.14 per unit of risk. If you would invest 733.00 in Barings Emerging Markets on November 7, 2024 and sell it today you would earn a total of 23.00 from holding Barings Emerging Markets or generate 3.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Emerging Markets vs. Short Duration Inflation
Performance |
| Timeline |
| Barings Emerging Markets |
| Short Duration Inflation |
Barings Emerging and Short Duration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Emerging and Short Duration
The main advantage of trading using opposite Barings Emerging and Short Duration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Emerging position performs unexpectedly, Short Duration 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 Short Duration will offset losses from the drop in Short Duration's long position.| Barings Emerging vs. Mid Cap 15x Strategy | Barings Emerging vs. Commodities Strategy Fund | Barings Emerging vs. Growth Strategy Fund | Barings Emerging vs. Angel Oak Multi Strategy |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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