Correlation Between Barings Global and Multi Index
Can any of the company-specific risk be diversified away by investing in both Barings Global and Multi Index 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 Global and Multi Index into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings Global Floating and Multi Index 2045 Lifetime, you can compare the effects of market volatilities on Barings Global and Multi Index 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 Global with a short position of Multi Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Global and Multi Index.
Diversification Opportunities for Barings Global and Multi Index
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Barings and Multi is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Barings Global Floating and Multi Index 2045 Lifetime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Index 2045 and Barings Global 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 Global Floating are associated (or correlated) with Multi Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Index 2045 has no effect on the direction of Barings Global i.e., Barings Global and Multi Index go up and down completely randomly.
Pair Corralation between Barings Global and Multi Index
Assuming the 90 days horizon Barings Global is expected to generate 1.2 times less return on investment than Multi Index. But when comparing it to its historical volatility, Barings Global Floating is 3.2 times less risky than Multi Index. It trades about 0.37 of its potential returns per unit of risk. Multi Index 2045 Lifetime is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,472 in Multi Index 2045 Lifetime on September 14, 2024 and sell it today you would earn a total of 18.00 from holding Multi Index 2045 Lifetime or generate 1.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Global Floating vs. Multi Index 2045 Lifetime
Performance |
| Timeline |
| Barings Global Floating |
| Multi Index 2045 |
Barings Global and Multi Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Global and Multi Index
The main advantage of trading using opposite Barings Global and Multi Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Global position performs unexpectedly, Multi Index 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 Multi Index will offset losses from the drop in Multi Index's long position.| Barings Global vs. Boston Partners Longshort | Barings Global vs. Barings Active Short | Barings Global vs. Quantitative Longshort Equity | Barings Global vs. Siit Ultra Short |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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