Correlation Between Barings Us and Federated Intermediate
Can any of the company-specific risk be diversified away by investing in both Barings Us and Federated Intermediate 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 Federated Intermediate 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 Federated Intermediate Municipal, you can compare the effects of market volatilities on Barings Us and Federated Intermediate 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 Federated Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Us and Federated Intermediate.
Diversification Opportunities for Barings Us and Federated Intermediate
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barings and Federated is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Barings High Yield and Federated Intermediate Municip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Intermediate 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 Federated Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Intermediate has no effect on the direction of Barings Us i.e., Barings Us and Federated Intermediate go up and down completely randomly.
Pair Corralation between Barings Us and Federated Intermediate
Assuming the 90 days horizon Barings High Yield is expected to generate 1.08 times more return on investment than Federated Intermediate. However, Barings Us is 1.08 times more volatile than Federated Intermediate Municipal. It trades about 0.22 of its potential returns per unit of risk. Federated Intermediate Municipal is currently generating about 0.07 per unit of risk. If you would invest 811.00 in Barings High Yield on November 3, 2024 and sell it today you would earn a total of 6.00 from holding Barings High Yield or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings High Yield vs. Federated Intermediate Municip
Performance |
| Timeline |
| Barings High Yield |
| Federated Intermediate |
Barings Us and Federated Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Us and Federated Intermediate
The main advantage of trading using opposite Barings Us and Federated Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Us position performs unexpectedly, Federated Intermediate 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 Federated Intermediate will offset losses from the drop in Federated Intermediate's long position.| Barings Us vs. Allianzgi Convertible Income | Barings Us vs. Fidelity Sai Convertible | Barings Us vs. Calamos Dynamic Convertible | Barings Us vs. Absolute Convertible Arbitrage |
| Federated Intermediate vs. Small Cap Equity | Federated Intermediate vs. Transamerica International Equity | Federated Intermediate vs. Aqr Equity Market | Federated Intermediate vs. Dws Equity Sector |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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