Correlation Between Barings Us and Rational Real
Can any of the company-specific risk be diversified away by investing in both Barings Us and Rational Real 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 Rational Real 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 Rational Real Strategies, you can compare the effects of market volatilities on Barings Us and Rational Real 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 Rational Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Us and Rational Real.
Diversification Opportunities for Barings Us and Rational Real
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Barings and Rational is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Barings High Yield and Rational Real Strategies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rational Real Strategies 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 Rational Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rational Real Strategies has no effect on the direction of Barings Us i.e., Barings Us and Rational Real go up and down completely randomly.
Pair Corralation between Barings Us and Rational Real
Assuming the 90 days horizon Barings High Yield is expected to generate 4.82 times more return on investment than Rational Real. However, Barings Us is 4.82 times more volatile than Rational Real Strategies. It trades about 0.22 of its potential returns per unit of risk. Rational Real Strategies is currently generating about 0.18 per unit of risk. If you would invest 811.00 in Barings High Yield on November 9, 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings High Yield vs. Rational Real Strategies
Performance |
| Timeline |
| Barings High Yield |
| Rational Real Strategies |
Barings Us and Rational Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Us and Rational Real
The main advantage of trading using opposite Barings Us and Rational Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Us position performs unexpectedly, Rational Real 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 Rational Real will offset losses from the drop in Rational Real's long position.| Barings Us vs. Towpath Technology | Barings Us vs. Technology Ultrasector Profund | Barings Us vs. Red Oak Technology | Barings Us vs. Blackrock Science Technology |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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