Correlation Between Barings Emerging and Johcm International
Can any of the company-specific risk be diversified away by investing in both Barings Emerging and Johcm International 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 Johcm International 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 Johcm International Select, you can compare the effects of market volatilities on Barings Emerging and Johcm International 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 Johcm International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and Johcm International.
Diversification Opportunities for Barings Emerging and Johcm International
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barings and Johcm is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets and Johcm International Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johcm International 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 Johcm International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johcm International has no effect on the direction of Barings Emerging i.e., Barings Emerging and Johcm International go up and down completely randomly.
Pair Corralation between Barings Emerging and Johcm International
Assuming the 90 days horizon Barings Emerging Markets is expected to generate 0.27 times more return on investment than Johcm International. However, Barings Emerging Markets is 3.74 times less risky than Johcm International. It trades about 0.1 of its potential returns per unit of risk. Johcm International Select is currently generating about -0.01 per unit of risk. If you would invest 756.00 in Barings Emerging Markets on September 13, 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 | 95.45% |
| Values | Daily Returns |
Barings Emerging Markets vs. Johcm International Select
Performance |
| Timeline |
| Barings Emerging Markets |
| Johcm International |
Barings Emerging and Johcm International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Emerging and Johcm International
The main advantage of trading using opposite Barings Emerging and Johcm International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Emerging position performs unexpectedly, Johcm International 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 Johcm International will offset losses from the drop in Johcm International'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 |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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