Correlation Between Barings Global and Permanent Portfolio

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Can any of the company-specific risk be diversified away by investing in both Barings Global and Permanent Portfolio 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 Permanent Portfolio 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 Permanent Portfolio Class, you can compare the effects of market volatilities on Barings Global and Permanent Portfolio 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 Permanent Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Global and Permanent Portfolio.

Diversification Opportunities for Barings Global and Permanent Portfolio

BaringsPermanentDiversified AwayBaringsPermanentDiversified Away100%
0.38
  Correlation Coefficient

Weak diversification

The 3 months correlation between Barings and Permanent is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Barings Global Floating and Permanent Portfolio Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Permanent Portfolio Class 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 Permanent Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Permanent Portfolio Class has no effect on the direction of Barings Global i.e., Barings Global and Permanent Portfolio go up and down completely randomly.

Pair Corralation between Barings Global and Permanent Portfolio

Assuming the 90 days horizon Barings Global is expected to generate 3.78 times less return on investment than Permanent Portfolio. But when comparing it to its historical volatility, Barings Global Floating is 4.26 times less risky than Permanent Portfolio. It trades about 0.16 of its potential returns per unit of risk. Permanent Portfolio Class is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  6,026  in Permanent Portfolio Class on November 25, 2024 and sell it today you would earn a total of  129.00  from holding Permanent Portfolio Class or generate 2.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Barings Global Floating  vs.  Permanent Portfolio Class

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -3-2-101234
JavaScript chart by amCharts 3.21.15BXFIX PRPHX
       Timeline  
Barings Global Floating 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Barings Global Floating are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Barings Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb8.68.628.648.668.688.78.728.748.76
Permanent Portfolio Class 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Permanent Portfolio Class are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Permanent Portfolio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb5859606162

Barings Global and Permanent Portfolio Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-0.44-0.24-0.0875-0.0448-0.0021340.03970.0840.230.430.63 2468101214
JavaScript chart by amCharts 3.21.15BXFIX PRPHX
       Returns  

Pair Trading with Barings Global and Permanent Portfolio

The main advantage of trading using opposite Barings Global and Permanent Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Global position performs unexpectedly, Permanent Portfolio 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 Permanent Portfolio will offset losses from the drop in Permanent Portfolio's long position.
The idea behind Barings Global Floating and Permanent Portfolio Class pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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