Correlation Between Barings Emerging and Wilmington Municipal
Can any of the company-specific risk be diversified away by investing in both Barings Emerging and Wilmington 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 Wilmington 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 Wilmington Municipal Bond, you can compare the effects of market volatilities on Barings Emerging and Wilmington 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 Wilmington Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and Wilmington Municipal.
Diversification Opportunities for Barings Emerging and Wilmington Municipal
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barings and Wilmington is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets and Wilmington Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Municipal Bond 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 Wilmington Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Municipal Bond has no effect on the direction of Barings Emerging i.e., Barings Emerging and Wilmington Municipal go up and down completely randomly.
Pair Corralation between Barings Emerging and Wilmington Municipal
Assuming the 90 days horizon Barings Emerging Markets is expected to generate 2.04 times more return on investment than Wilmington Municipal. However, Barings Emerging is 2.04 times more volatile than Wilmington Municipal Bond. It trades about 0.07 of its potential returns per unit of risk. Wilmington Municipal Bond is currently generating about 0.07 per unit of risk. If you would invest 662.00 in Barings Emerging Markets on August 25, 2024 and sell it today you would earn a total of 96.00 from holding Barings Emerging Markets or generate 14.5% 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. Wilmington Municipal Bond
Performance |
| Timeline |
| Barings Emerging Markets |
| Wilmington Municipal Bond |
Barings Emerging and Wilmington Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Emerging and Wilmington Municipal
The main advantage of trading using opposite Barings Emerging and Wilmington Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Emerging position performs unexpectedly, Wilmington 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 Wilmington Municipal will offset losses from the drop in Wilmington Municipal's long position.| Barings Emerging vs. Barings Active Short | Barings Emerging vs. Barings Emerging Markets | Barings Emerging vs. Barings Emerging Markets | Barings Emerging vs. Barings Active Short |
| Wilmington Municipal vs. Lord Abbett Government | Wilmington Municipal vs. Blackrock Government Bond | Wilmington Municipal vs. Dreyfus Government Cash | Wilmington Municipal vs. Dws 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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