Correlation Between Barings Emerging and Small Capitalization
Can any of the company-specific risk be diversified away by investing in both Barings Emerging and Small Capitalization 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 Small Capitalization 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 Small Capitalization Portfolio, you can compare the effects of market volatilities on Barings Emerging and Small Capitalization 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 Small Capitalization. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and Small Capitalization.
Diversification Opportunities for Barings Emerging and Small Capitalization
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Barings and Small is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets and Small Capitalization Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Capitalization 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 Small Capitalization. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Capitalization has no effect on the direction of Barings Emerging i.e., Barings Emerging and Small Capitalization go up and down completely randomly.
Pair Corralation between Barings Emerging and Small Capitalization
Assuming the 90 days horizon Barings Emerging is expected to generate 1.77 times less return on investment than Small Capitalization. But when comparing it to its historical volatility, Barings Emerging Markets is 3.55 times less risky than Small Capitalization. It trades about 0.06 of its potential returns per unit of risk. Small Capitalization Portfolio is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 611.00 in Small Capitalization Portfolio on August 25, 2024 and sell it today you would earn a total of 111.00 from holding Small Capitalization Portfolio or generate 18.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Barings Emerging Markets vs. Small Capitalization Portfolio
Performance |
| Timeline |
| Barings Emerging Markets |
| Small Capitalization |
Barings Emerging and Small Capitalization Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Emerging and Small Capitalization
The main advantage of trading using opposite Barings Emerging and Small Capitalization positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Emerging position performs unexpectedly, Small Capitalization 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 Small Capitalization will offset losses from the drop in Small Capitalization's long position.| Barings Emerging vs. Jhancock Short Duration | Barings Emerging vs. Maryland Short Term Tax Free | Barings Emerging vs. Locorr Longshort Modities | Barings Emerging vs. Ab Select Longshort |
| Small Capitalization vs. Aqr Equity Market | Small Capitalization vs. Doubleline Emerging Markets | Small Capitalization vs. Barings Emerging Markets | Small Capitalization vs. Aqr Long Short Equity |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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