Correlation Between Barings Emerging and Gateway Equity
Can any of the company-specific risk be diversified away by investing in both Barings Emerging and Gateway Equity 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 Gateway Equity 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 Gateway Equity Call, you can compare the effects of market volatilities on Barings Emerging and Gateway Equity 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 Gateway Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and Gateway Equity.
Diversification Opportunities for Barings Emerging and Gateway Equity
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Barings and Gateway is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets and Gateway Equity Call in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gateway Equity Call 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 Gateway Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gateway Equity Call has no effect on the direction of Barings Emerging i.e., Barings Emerging and Gateway Equity go up and down completely randomly.
Pair Corralation between Barings Emerging and Gateway Equity
Assuming the 90 days horizon Barings Emerging is expected to generate 5.62 times less return on investment than Gateway Equity. But when comparing it to its historical volatility, Barings Emerging Markets is 1.73 times less risky than Gateway Equity. It trades about 0.06 of its potential returns per unit of risk. Gateway Equity Call is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,002 in Gateway Equity Call on September 14, 2024 and sell it today you would earn a total of 30.00 from holding Gateway Equity Call or generate 1.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Emerging Markets vs. Gateway Equity Call
Performance |
| Timeline |
| Barings Emerging Markets |
| Gateway Equity Call |
Barings Emerging and Gateway Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Emerging and Gateway Equity
The main advantage of trading using opposite Barings Emerging and Gateway Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Emerging position performs unexpectedly, Gateway Equity 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 Gateway Equity will offset losses from the drop in Gateway Equity's long position.| Barings Emerging vs. Clearbridge Energy Mlp | Barings Emerging vs. Dreyfus Natural Resources | Barings Emerging vs. Jennison Natural Resources | Barings Emerging vs. Calvert Global Energy |
| Gateway Equity vs. Guggenheim High Yield | Gateway Equity vs. Gmo High Yield | Gateway Equity vs. Pax High Yield | Gateway Equity vs. Blackrock High Yield |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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