Correlation Between Barings Us and Rational/pier
Can any of the company-specific risk be diversified away by investing in both Barings Us and Rational/pier 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/pier 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 Rationalpier 88 Convertible, you can compare the effects of market volatilities on Barings Us and Rational/pier 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/pier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Us and Rational/pier.
Diversification Opportunities for Barings Us and Rational/pier
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Barings and Rational/pier is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Barings High Yield and Rationalpier 88 Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rationalpier 88 Conv 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/pier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rationalpier 88 Conv has no effect on the direction of Barings Us i.e., Barings Us and Rational/pier go up and down completely randomly.
Pair Corralation between Barings Us and Rational/pier
Assuming the 90 days horizon Barings High Yield is expected to generate 0.64 times more return on investment than Rational/pier. However, Barings High Yield is 1.56 times less risky than Rational/pier. It trades about 0.13 of its potential returns per unit of risk. Rationalpier 88 Convertible is currently generating about 0.05 per unit of risk. If you would invest 686.00 in Barings High Yield on November 6, 2024 and sell it today you would earn a total of 131.00 from holding Barings High Yield or generate 19.1% 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. Rationalpier 88 Convertible
Performance |
| Timeline |
| Barings High Yield |
| Rationalpier 88 Conv |
Barings Us and Rational/pier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Us and Rational/pier
The main advantage of trading using opposite Barings Us and Rational/pier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Us position performs unexpectedly, Rational/pier 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/pier will offset losses from the drop in Rational/pier's long position.| Barings Us vs. Baron Health Care | Barings Us vs. Blackrock Health Sciences | Barings Us vs. The Hartford Healthcare | Barings Us vs. Hartford Healthcare Hls |
| Rational/pier vs. Vanguard Financials Index | Rational/pier vs. Transamerica Financial Life | Rational/pier vs. Mesirow Financial Small | Rational/pier vs. 1919 Financial Services |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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