Correlation Between Barings Emerging and California High-yield
Can any of the company-specific risk be diversified away by investing in both Barings Emerging and California High-yield 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 California High-yield 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 California High Yield Municipal, you can compare the effects of market volatilities on Barings Emerging and California High-yield 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 California High-yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and California High-yield.
Diversification Opportunities for Barings Emerging and California High-yield
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barings and California is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets and California High Yield Municipa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California High Yield 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 California High-yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California High Yield has no effect on the direction of Barings Emerging i.e., Barings Emerging and California High-yield go up and down completely randomly.
Pair Corralation between Barings Emerging and California High-yield
Assuming the 90 days horizon Barings Emerging is expected to generate 1.01 times less return on investment than California High-yield. In addition to that, Barings Emerging is 1.24 times more volatile than California High Yield Municipal. It trades about 0.06 of its total potential returns per unit of risk. California High Yield Municipal is currently generating about 0.07 per unit of volatility. If you would invest 983.00 in California High Yield Municipal on September 2, 2024 and sell it today you would earn a total of 12.00 from holding California High Yield Municipal or generate 1.22% 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. California High Yield Municipa
Performance |
| Timeline |
| Barings Emerging Markets |
| California High Yield |
Barings Emerging and California High-yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Emerging and California High-yield
The main advantage of trading using opposite Barings Emerging and California High-yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Emerging position performs unexpectedly, California High-yield 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 California High-yield will offset losses from the drop in California High-yield's long position.| Barings Emerging vs. Vy Goldman Sachs | Barings Emerging vs. Oppenheimer Gold Special | Barings Emerging vs. Gabelli Gold Fund | Barings Emerging vs. James Balanced Golden |
| California High-yield vs. Equity Growth Fund | California High-yield vs. Income Growth Fund | California High-yield vs. Diversified Bond Fund | California High-yield vs. Emerging Markets 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |