Correlation Between Barings Us and Barings Emerging
Can any of the company-specific risk be diversified away by investing in both Barings Us and Barings Emerging 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 Us and Barings Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings High Yield and Barings Emerging Markets, you can compare the effects of market volatilities on Barings Us and Barings Emerging 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 Us with a short position of Barings Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Us and Barings Emerging.
Diversification Opportunities for Barings Us and Barings Emerging
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Barings and Barings is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Barings High Yield and Barings Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Emerging Markets and Barings Us 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 High Yield are associated (or correlated) with Barings Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Emerging Markets has no effect on the direction of Barings Us i.e., Barings Us and Barings Emerging go up and down completely randomly.
Pair Corralation between Barings Us and Barings Emerging
Assuming the 90 days horizon Barings High Yield is expected to generate 0.47 times more return on investment than Barings Emerging. However, Barings High Yield is 2.12 times less risky than Barings Emerging. It trades about 0.22 of its potential returns per unit of risk. Barings Emerging Markets is currently generating about 0.05 per unit of risk. If you would invest 801.00 in Barings High Yield on August 31, 2024 and sell it today you would earn a total of 17.00 from holding Barings High Yield or generate 2.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings High Yield vs. Barings Emerging Markets
Performance |
| Timeline |
| Barings High Yield |
| Barings Emerging Markets |
Barings Us and Barings Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Us and Barings Emerging
The main advantage of trading using opposite Barings Us and Barings Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Us position performs unexpectedly, Barings Emerging 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 Barings Emerging will offset losses from the drop in Barings Emerging's long position.| Barings Us vs. Aqr Risk Balanced Modities | Barings Us vs. Legg Mason Partners | Barings Us vs. Needham Aggressive Growth | Barings Us vs. Ab High 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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