Correlation Between Barings Emerging and Western Asset
Can any of the company-specific risk be diversified away by investing in both Barings Emerging and Western Asset 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 Western Asset 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 Western Asset Diversified, you can compare the effects of market volatilities on Barings Emerging and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and Western Asset.
Diversification Opportunities for Barings Emerging and Western Asset
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Barings and Western is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets and Western Asset Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Diversified 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Diversified has no effect on the direction of Barings Emerging i.e., Barings Emerging and Western Asset go up and down completely randomly.
Pair Corralation between Barings Emerging and Western Asset
Assuming the 90 days horizon Barings Emerging Markets is expected to generate 1.04 times more return on investment than Western Asset. However, Barings Emerging is 1.04 times more volatile than Western Asset Diversified. It trades about 0.07 of its potential returns per unit of risk. Western Asset Diversified is currently generating about 0.01 per unit of risk. If you would invest 667.00 in Barings Emerging Markets on August 28, 2024 and sell it today you would earn a total of 89.00 from holding Barings Emerging Markets or generate 13.34% 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. Western Asset Diversified
Performance |
| Timeline |
| Barings Emerging Markets |
| Western Asset Diversified |
Barings Emerging and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Emerging and Western Asset
The main advantage of trading using opposite Barings Emerging and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Emerging position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Barings Emerging vs. Delaware Limited Term Diversified | Barings Emerging vs. Tiaa Cref Lifestyle Conservative | Barings Emerging vs. Oaktree Diversifiedome | Barings Emerging vs. Pimco Diversified Income |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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