Correlation Between Barings Us and Hunter Small
Can any of the company-specific risk be diversified away by investing in both Barings Us and Hunter Small 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 Hunter Small 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 Hunter Small Cap, you can compare the effects of market volatilities on Barings Us and Hunter Small 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 Hunter Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Us and Hunter Small.
Diversification Opportunities for Barings Us and Hunter Small
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Barings and Hunter is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Barings High Yield and Hunter Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunter Small Cap 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 Hunter Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunter Small Cap has no effect on the direction of Barings Us i.e., Barings Us and Hunter Small go up and down completely randomly.
Pair Corralation between Barings Us and Hunter Small
Assuming the 90 days horizon Barings Us is expected to generate 5.29 times less return on investment than Hunter Small. But when comparing it to its historical volatility, Barings High Yield is 5.26 times less risky than Hunter Small. It trades about 0.16 of its potential returns per unit of risk. Hunter Small Cap is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,242 in Hunter Small Cap on November 7, 2024 and sell it today you would earn a total of 32.00 from holding Hunter Small Cap or generate 2.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings High Yield vs. Hunter Small Cap
Performance |
| Timeline |
| Barings High Yield |
| Hunter Small Cap |
Barings Us and Hunter Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Us and Hunter Small
The main advantage of trading using opposite Barings Us and Hunter Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Us position performs unexpectedly, Hunter Small 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 Hunter Small will offset losses from the drop in Hunter Small'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 |
| Hunter Small vs. Investec Emerging Markets | Hunter Small vs. Federated Emerging Market | Hunter Small vs. Franklin Emerging Market | Hunter Small vs. The Hartford Emerging |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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