Correlation Between Barings Us and Mesirow Financial
Can any of the company-specific risk be diversified away by investing in both Barings Us and Mesirow Financial 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 Mesirow Financial 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 Mesirow Financial Small, you can compare the effects of market volatilities on Barings Us and Mesirow Financial 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 Mesirow Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Us and Mesirow Financial.
Diversification Opportunities for Barings Us and Mesirow Financial
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Barings and Mesirow is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Barings High Yield and Mesirow Financial Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesirow Financial Small 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 Mesirow Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesirow Financial Small has no effect on the direction of Barings Us i.e., Barings Us and Mesirow Financial go up and down completely randomly.
Pair Corralation between Barings Us and Mesirow Financial
Assuming the 90 days horizon Barings Us is expected to generate 6.29 times less return on investment than Mesirow Financial. But when comparing it to its historical volatility, Barings High Yield is 5.02 times less risky than Mesirow Financial. It trades about 0.16 of its potential returns per unit of risk. Mesirow Financial Small is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,263 in Mesirow Financial Small on November 7, 2024 and sell it today you would earn a total of 39.00 from holding Mesirow Financial Small or generate 3.09% 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. Mesirow Financial Small
Performance |
| Timeline |
| Barings High Yield |
| Mesirow Financial Small |
Barings Us and Mesirow Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Us and Mesirow Financial
The main advantage of trading using opposite Barings Us and Mesirow Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Us position performs unexpectedly, Mesirow Financial 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 Mesirow Financial will offset losses from the drop in Mesirow Financial'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 |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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