Correlation Between Barings Emerging and Diversified Bond
Can any of the company-specific risk be diversified away by investing in both Barings Emerging and Diversified Bond 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 Diversified Bond 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 Diversified Bond Fund, you can compare the effects of market volatilities on Barings Emerging and Diversified Bond 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 Diversified Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and Diversified Bond.
Diversification Opportunities for Barings Emerging and Diversified Bond
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barings and Diversified is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets and Diversified Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diversified Bond 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 Diversified Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diversified Bond has no effect on the direction of Barings Emerging i.e., Barings Emerging and Diversified Bond go up and down completely randomly.
Pair Corralation between Barings Emerging and Diversified Bond
Assuming the 90 days horizon Barings Emerging Markets is expected to generate 0.91 times more return on investment than Diversified Bond. However, Barings Emerging Markets is 1.1 times less risky than Diversified Bond. It trades about 0.22 of its potential returns per unit of risk. Diversified Bond Fund is currently generating about 0.1 per unit of risk. If you would invest 747.00 in Barings Emerging Markets on November 6, 2024 and sell it today you would earn a total of 9.00 from holding Barings Emerging Markets or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Barings Emerging Markets vs. Diversified Bond Fund
Performance |
| Timeline |
| Barings Emerging Markets |
| Diversified Bond |
Barings Emerging and Diversified Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Emerging and Diversified Bond
The main advantage of trading using opposite Barings Emerging and Diversified Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Emerging position performs unexpectedly, Diversified Bond 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 Diversified Bond will offset losses from the drop in Diversified Bond'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 |
| Diversified Bond vs. Pnc International Growth | Diversified Bond vs. Vanguard Growth And | Diversified Bond vs. Qs Defensive Growth | Diversified Bond vs. Rational Defensive Growth |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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