Correlation Between Barings Us and American Funds
Can any of the company-specific risk be diversified away by investing in both Barings Us and American Funds 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 American Funds 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 American Funds Growth, you can compare the effects of market volatilities on Barings Us and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Us and American Funds.
Diversification Opportunities for Barings Us and American Funds
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Barings and American is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Barings High Yield and American Funds Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Growth 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Growth has no effect on the direction of Barings Us i.e., Barings Us and American Funds go up and down completely randomly.
Pair Corralation between Barings Us and American Funds
Assuming the 90 days horizon Barings Us is expected to generate 7.56 times less return on investment than American Funds. But when comparing it to its historical volatility, Barings High Yield is 5.54 times less risky than American Funds. It trades about 0.19 of its potential returns per unit of risk. American Funds Growth is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 2,537 in American Funds Growth on November 2, 2024 and sell it today you would earn a total of 119.00 from holding American Funds Growth or generate 4.69% 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. American Funds Growth
Performance |
| Timeline |
| Barings High Yield |
| American Funds Growth |
Barings Us and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Us and American Funds
The main advantage of trading using opposite Barings Us and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Us position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Barings Us vs. Goldman Sachs Strategic | Barings Us vs. The Gold Bullion | Barings Us vs. Sprott Gold Equity | Barings Us vs. Franklin Gold Precious |
| American Funds vs. Rationalpier 88 Convertible | American Funds vs. Fidelity Sai Convertible | American Funds vs. Allianzgi Convertible Income | American Funds vs. Advent Claymore Convertible |
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 CEOs Directory module to screen CEOs from public companies around the world.
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