Correlation Between Barings Emerging and New Alternatives
Can any of the company-specific risk be diversified away by investing in both Barings Emerging and New Alternatives 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 New Alternatives 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 New Alternatives Fund, you can compare the effects of market volatilities on Barings Emerging and New Alternatives 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 New Alternatives. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and New Alternatives.
Diversification Opportunities for Barings Emerging and New Alternatives
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barings and New is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets and New Alternatives Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Alternatives 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 New Alternatives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Alternatives has no effect on the direction of Barings Emerging i.e., Barings Emerging and New Alternatives go up and down completely randomly.
Pair Corralation between Barings Emerging and New Alternatives
Assuming the 90 days horizon Barings Emerging is expected to generate 4.63 times less return on investment than New Alternatives. But when comparing it to its historical volatility, Barings Emerging Markets is 3.44 times less risky than New Alternatives. It trades about 0.1 of its potential returns per unit of risk. New Alternatives Fund is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 6,325 in New Alternatives Fund on September 13, 2024 and sell it today you would earn a total of 115.00 from holding New Alternatives Fund or generate 1.82% 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. New Alternatives Fund
Performance |
| Timeline |
| Barings Emerging Markets |
| New Alternatives |
Barings Emerging and New Alternatives Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Emerging and New Alternatives
The main advantage of trading using opposite Barings Emerging and New Alternatives positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Emerging position performs unexpectedly, New Alternatives 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 New Alternatives will offset losses from the drop in New Alternatives' 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 |
| New Alternatives vs. Inverse Government Long | New Alternatives vs. Lord Abbett Government | New Alternatives vs. Sit Government Securities | New Alternatives vs. Hsbc Government Money |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |