Correlation Between Barings Us and Metropolitan West
Can any of the company-specific risk be diversified away by investing in both Barings Us and Metropolitan West 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 Metropolitan West 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 Metropolitan West Porate, you can compare the effects of market volatilities on Barings Us and Metropolitan West 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 Metropolitan West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Us and Metropolitan West.
Diversification Opportunities for Barings Us and Metropolitan West
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barings and Metropolitan is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Barings High Yield and Metropolitan West Porate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan West Porate 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 Metropolitan West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan West Porate has no effect on the direction of Barings Us i.e., Barings Us and Metropolitan West go up and down completely randomly.
Pair Corralation between Barings Us and Metropolitan West
Assuming the 90 days horizon Barings Us is expected to generate 1.0 times less return on investment than Metropolitan West. But when comparing it to its historical volatility, Barings High Yield is 1.61 times less risky than Metropolitan West. It trades about 0.21 of its potential returns per unit of risk. Metropolitan West Porate is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 856.00 in Metropolitan West Porate on October 12, 2024 and sell it today you would earn a total of 67.00 from holding Metropolitan West Porate or generate 7.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings High Yield vs. Metropolitan West Porate
Performance |
| Timeline |
| Barings High Yield |
| Metropolitan West Porate |
Barings Us and Metropolitan West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Us and Metropolitan West
The main advantage of trading using opposite Barings Us and Metropolitan West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Us position performs unexpectedly, Metropolitan West 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 Metropolitan West will offset losses from the drop in Metropolitan West's long position.| Barings Us vs. Amg Managers Centersquare | Barings Us vs. Jhancock Real Estate | Barings Us vs. Nexpoint Real Estate | Barings Us vs. Redwood Real Estate |
| Metropolitan West vs. Touchstone Small Cap | Metropolitan West vs. Champlain Small | Metropolitan West vs. Sp Smallcap 600 | Metropolitan West vs. Kinetics Small Cap |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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