Correlation Between Barings Us and Pear Tree
Can any of the company-specific risk be diversified away by investing in both Barings Us and Pear Tree 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 Pear Tree 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 Pear Tree Polaris, you can compare the effects of market volatilities on Barings Us and Pear Tree 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 Pear Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Us and Pear Tree.
Diversification Opportunities for Barings Us and Pear Tree
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barings and Pear is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Barings High Yield and Pear Tree Polaris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pear Tree Polaris 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 Pear Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pear Tree Polaris has no effect on the direction of Barings Us i.e., Barings Us and Pear Tree go up and down completely randomly.
Pair Corralation between Barings Us and Pear Tree
Assuming the 90 days horizon Barings High Yield is expected to generate 0.27 times more return on investment than Pear Tree. However, Barings High Yield is 3.73 times less risky than Pear Tree. It trades about 0.28 of its potential returns per unit of risk. Pear Tree Polaris is currently generating about 0.0 per unit of risk. If you would invest 806.00 in Barings High Yield on October 23, 2024 and sell it today you would earn a total of 8.00 from holding Barings High Yield or generate 0.99% 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. Pear Tree Polaris
Performance |
| Timeline |
| Barings High Yield |
| Pear Tree Polaris |
Barings Us and Pear Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Us and Pear Tree
The main advantage of trading using opposite Barings Us and Pear Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Us position performs unexpectedly, Pear Tree 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 Pear Tree will offset losses from the drop in Pear Tree's long position.| Barings Us vs. Dreyfus High Yield | Barings Us vs. Blackrock High Yield | Barings Us vs. Jpmorgan High Yield | Barings Us vs. Federated High Yield |
| Pear Tree vs. Barings High Yield | Pear Tree vs. Transamerica High Yield | Pear Tree vs. Siit High Yield | Pear Tree vs. Pace High Yield |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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