Correlation Between Barings Emerging and Morningstar Municipal
Can any of the company-specific risk be diversified away by investing in both Barings Emerging and Morningstar Municipal 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 Morningstar Municipal 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 Morningstar Municipal Bond, you can compare the effects of market volatilities on Barings Emerging and Morningstar Municipal 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 Morningstar Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and Morningstar Municipal.
Diversification Opportunities for Barings Emerging and Morningstar Municipal
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Barings and Morningstar is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets and Morningstar Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morningstar Municipal 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 Morningstar Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morningstar Municipal has no effect on the direction of Barings Emerging i.e., Barings Emerging and Morningstar Municipal go up and down completely randomly.
Pair Corralation between Barings Emerging and Morningstar Municipal
Assuming the 90 days horizon Barings Emerging Markets is expected to generate 2.07 times more return on investment than Morningstar Municipal. However, Barings Emerging is 2.07 times more volatile than Morningstar Municipal Bond. It trades about 0.12 of its potential returns per unit of risk. Morningstar Municipal Bond is currently generating about 0.17 per unit of risk. If you would invest 662.00 in Barings Emerging Markets on September 21, 2024 and sell it today you would earn a total of 85.00 from holding Barings Emerging Markets or generate 12.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Emerging Markets vs. Morningstar Municipal Bond
Performance |
| Timeline |
| Barings Emerging Markets |
| Morningstar Municipal |
Barings Emerging and Morningstar Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Emerging and Morningstar Municipal
The main advantage of trading using opposite Barings Emerging and Morningstar Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Emerging position performs unexpectedly, Morningstar Municipal 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 Morningstar Municipal will offset losses from the drop in Morningstar Municipal's long position.| Barings Emerging vs. Qs Growth Fund | Barings Emerging vs. Smallcap Growth Fund | Barings Emerging vs. Franklin Growth Opportunities | Barings Emerging vs. L Abbett Growth |
| Morningstar Municipal vs. Vy Baron Growth | Morningstar Municipal vs. Tfa Alphagen Growth | Morningstar Municipal vs. Qs Moderate Growth | Morningstar Municipal vs. Mid Cap Growth |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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