Correlation Between Barings Global and Prudential Qma
Can any of the company-specific risk be diversified away by investing in both Barings Global and Prudential Qma 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 Prudential Qma 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 Prudential Qma Strategic, you can compare the effects of market volatilities on Barings Global and Prudential Qma 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 Prudential Qma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Global and Prudential Qma.
Diversification Opportunities for Barings Global and Prudential Qma
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barings and Prudential is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Barings Global Floating and Prudential Qma Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Qma Strategic 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 Prudential Qma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Qma Strategic has no effect on the direction of Barings Global i.e., Barings Global and Prudential Qma go up and down completely randomly.
Pair Corralation between Barings Global and Prudential Qma
Assuming the 90 days horizon Barings Global is expected to generate 6.42 times less return on investment than Prudential Qma. But when comparing it to its historical volatility, Barings Global Floating is 8.2 times less risky than Prudential Qma. It trades about 0.33 of its potential returns per unit of risk. Prudential Qma Strategic is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,451 in Prudential Qma Strategic on August 29, 2024 and sell it today you would earn a total of 72.00 from holding Prudential Qma Strategic or generate 4.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Barings Global Floating vs. Prudential Qma Strategic
Performance |
| Timeline |
| Barings Global Floating |
| Prudential Qma Strategic |
Barings Global and Prudential Qma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Global and Prudential Qma
The main advantage of trading using opposite Barings Global and Prudential Qma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Global position performs unexpectedly, Prudential Qma 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 Prudential Qma will offset losses from the drop in Prudential Qma's long position.| Barings Global vs. Floating Rate Fund | Barings Global vs. Lord Abbett Inv | Barings Global vs. HUMANA INC | Barings Global vs. Aquagold International |
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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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