Correlation Between Barings Us and Capital Income
Can any of the company-specific risk be diversified away by investing in both Barings Us and Capital Income 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 Capital Income 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 Capital Income Builder, you can compare the effects of market volatilities on Barings Us and Capital Income 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 Capital Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Us and Capital Income.
Diversification Opportunities for Barings Us and Capital Income
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Barings and Capital is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Barings High Yield and Capital Income Builder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Income Builder 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 Capital Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Income Builder has no effect on the direction of Barings Us i.e., Barings Us and Capital Income go up and down completely randomly.
Pair Corralation between Barings Us and Capital Income
Assuming the 90 days horizon Barings High Yield is expected to generate 0.14 times more return on investment than Capital Income. However, Barings High Yield is 6.95 times less risky than Capital Income. It trades about -0.31 of its potential returns per unit of risk. Capital Income Builder is currently generating about -0.24 per unit of risk. If you would invest 821.00 in Barings High Yield on October 9, 2024 and sell it today you would lose (8.00) from holding Barings High Yield or give up 0.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings High Yield vs. Capital Income Builder
Performance |
| Timeline |
| Barings High Yield |
| Capital Income Builder |
Barings Us and Capital Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Us and Capital Income
The main advantage of trading using opposite Barings Us and Capital Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Us position performs unexpectedly, Capital Income 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 Capital Income will offset losses from the drop in Capital Income's long position.| Barings Us vs. Barings Active Short | Barings Us vs. Barings Emerging Markets | Barings Us vs. Barings Emerging Markets | Barings Us vs. Barings Active Short |
| Capital Income vs. Transamerica Asset Allocation | Capital Income vs. Federated Global Allocation | Capital Income vs. Commonwealth Global Fund | Capital Income vs. Barings Global Floating |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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