Correlation Between Barings Us and Quantitative
Can any of the company-specific risk be diversified away by investing in both Barings Us and Quantitative 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 Quantitative 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 Quantitative Longshort Equity, you can compare the effects of market volatilities on Barings Us and Quantitative 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 Quantitative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Us and Quantitative.
Diversification Opportunities for Barings Us and Quantitative
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Barings and Quantitative is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Barings High Yield and Quantitative Longshort Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantitative Longshort 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 Quantitative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantitative Longshort has no effect on the direction of Barings Us i.e., Barings Us and Quantitative go up and down completely randomly.
Pair Corralation between Barings Us and Quantitative
Assuming the 90 days horizon Barings Us is expected to generate 3.86 times less return on investment than Quantitative. But when comparing it to its historical volatility, Barings High Yield is 2.37 times less risky than Quantitative. It trades about 0.16 of its potential returns per unit of risk. Quantitative Longshort Equity is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,360 in Quantitative Longshort Equity on November 7, 2024 and sell it today you would earn a total of 26.00 from holding Quantitative Longshort Equity or generate 1.91% 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. Quantitative Longshort Equity
Performance |
| Timeline |
| Barings High Yield |
| Quantitative Longshort |
Barings Us and Quantitative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Us and Quantitative
The main advantage of trading using opposite Barings Us and Quantitative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Us position performs unexpectedly, Quantitative 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 Quantitative will offset losses from the drop in Quantitative's long position.| Barings Us vs. Tax Free Conservative Income | Barings Us vs. Guidepath Conservative Income | Barings Us vs. Aqr Diversified Arbitrage | Barings Us vs. Fulcrum Diversified Absolute |
| Quantitative vs. Barings High Yield | Quantitative vs. Artisan High Income | Quantitative vs. Maryland Tax Free Bond | Quantitative vs. Ab Bond Inflation |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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