Correlation Between Barings Emerging and Catholic Responsible
Can any of the company-specific risk be diversified away by investing in both Barings Emerging and Catholic Responsible 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 Catholic Responsible 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 Catholic Responsible Investments, you can compare the effects of market volatilities on Barings Emerging and Catholic Responsible 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 Catholic Responsible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and Catholic Responsible.
Diversification Opportunities for Barings Emerging and Catholic Responsible
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Barings and Catholic is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets and Catholic Responsible Investmen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catholic Responsible 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 Catholic Responsible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catholic Responsible has no effect on the direction of Barings Emerging i.e., Barings Emerging and Catholic Responsible go up and down completely randomly.
Pair Corralation between Barings Emerging and Catholic Responsible
Assuming the 90 days horizon Barings Emerging is expected to generate 3.4 times less return on investment than Catholic Responsible. But when comparing it to its historical volatility, Barings Emerging Markets is 1.29 times less risky than Catholic Responsible. It trades about 0.1 of its potential returns per unit of risk. Catholic Responsible Investments is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,054 in Catholic Responsible Investments on September 13, 2024 and sell it today you would earn a total of 15.00 from holding Catholic Responsible Investments or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Barings Emerging Markets vs. Catholic Responsible Investmen
Performance |
| Timeline |
| Barings Emerging Markets |
| Catholic Responsible |
Barings Emerging and Catholic Responsible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Emerging and Catholic Responsible
The main advantage of trading using opposite Barings Emerging and Catholic Responsible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Emerging position performs unexpectedly, Catholic Responsible 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 Catholic Responsible will offset losses from the drop in Catholic Responsible's long position.| Barings Emerging vs. Barings Active Short | Barings Emerging vs. Barings Emerging Markets | Barings Emerging vs. Barings Active Short | Barings Emerging vs. Barings Global Floating |
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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