Correlation Between Barings Emerging and Gmo Emerging
Can any of the company-specific risk be diversified away by investing in both Barings Emerging and Gmo Emerging 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 Gmo Emerging 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 Gmo Emerging Markets, you can compare the effects of market volatilities on Barings Emerging and Gmo Emerging 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 Gmo Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and Gmo Emerging.
Diversification Opportunities for Barings Emerging and Gmo Emerging
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barings and Gmo is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets and Gmo Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Emerging Markets 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 Gmo Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Emerging Markets has no effect on the direction of Barings Emerging i.e., Barings Emerging and Gmo Emerging go up and down completely randomly.
Pair Corralation between Barings Emerging and Gmo Emerging
Assuming the 90 days horizon Barings Emerging Markets is expected to generate 0.48 times more return on investment than Gmo Emerging. However, Barings Emerging Markets is 2.1 times less risky than Gmo Emerging. It trades about 0.06 of its potential returns per unit of risk. Gmo Emerging Markets is currently generating about -0.18 per unit of risk. If you would invest 756.00 in Barings Emerging Markets on September 3, 2024 and sell it today you would earn a total of 3.00 from holding Barings Emerging Markets or generate 0.4% 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. Gmo Emerging Markets
Performance |
| Timeline |
| Barings Emerging Markets |
| Gmo Emerging Markets |
Barings Emerging and Gmo Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Emerging and Gmo Emerging
The main advantage of trading using opposite Barings Emerging and Gmo Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Emerging position performs unexpectedly, Gmo Emerging 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 Gmo Emerging will offset losses from the drop in Gmo Emerging's long position.| Barings Emerging vs. Ab Small Cap | Barings Emerging vs. Ab Small Cap | Barings Emerging vs. Oklahoma College Savings | Barings Emerging vs. Champlain Small |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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