Correlation Between Barings Emerging and Frost Credit
Can any of the company-specific risk be diversified away by investing in both Barings Emerging and Frost Credit 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 Frost Credit 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 Frost Credit Fund, you can compare the effects of market volatilities on Barings Emerging and Frost Credit 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 Frost Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and Frost Credit.
Diversification Opportunities for Barings Emerging and Frost Credit
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barings and Frost is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets and Frost Credit Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frost Credit 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 Frost Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frost Credit has no effect on the direction of Barings Emerging i.e., Barings Emerging and Frost Credit go up and down completely randomly.
Pair Corralation between Barings Emerging and Frost Credit
Assuming the 90 days horizon Barings Emerging is expected to generate 1.22 times less return on investment than Frost Credit. In addition to that, Barings Emerging is 2.13 times more volatile than Frost Credit Fund. It trades about 0.08 of its total potential returns per unit of risk. Frost Credit Fund is currently generating about 0.21 per unit of volatility. If you would invest 794.00 in Frost Credit Fund on December 1, 2024 and sell it today you would earn a total of 154.00 from holding Frost Credit Fund or generate 19.4% 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. Frost Credit Fund
Performance |
| Timeline |
| Barings Emerging Markets |
| Frost Credit |
Barings Emerging and Frost Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Emerging and Frost Credit
The main advantage of trading using opposite Barings Emerging and Frost Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Emerging position performs unexpectedly, Frost Credit 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 Frost Credit will offset losses from the drop in Frost Credit's long position.| Barings Emerging vs. Franklin Adjustable Government | Barings Emerging vs. Lord Abbett Intermediate | Barings Emerging vs. Us Government Securities | Barings Emerging vs. Us Government Securities |
| Frost Credit vs. Us Government Securities | Frost Credit vs. Old Westbury Municipal | Frost Credit vs. Intermediate Term Tax Free Bond | Frost Credit vs. Prudential California Muni |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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