Correlation Between Barings Us and California Bond
Can any of the company-specific risk be diversified away by investing in both Barings Us and California Bond 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 California Bond 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 California Bond Fund, you can compare the effects of market volatilities on Barings Us and California Bond 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 California Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Us and California Bond.
Diversification Opportunities for Barings Us and California Bond
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Barings and California is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Barings High Yield and California Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Bond 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 California Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Bond has no effect on the direction of Barings Us i.e., Barings Us and California Bond go up and down completely randomly.
Pair Corralation between Barings Us and California Bond
Assuming the 90 days horizon Barings High Yield is expected to generate 0.62 times more return on investment than California Bond. However, Barings High Yield is 1.61 times less risky than California Bond. It trades about 0.22 of its potential returns per unit of risk. California Bond Fund is currently generating about -0.03 per unit of risk. If you would invest 811.00 in Barings High Yield on November 3, 2024 and sell it today you would earn a total of 6.00 from holding Barings High Yield or generate 0.74% 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. California Bond Fund
Performance |
| Timeline |
| Barings High Yield |
| California Bond |
Barings Us and California Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Us and California Bond
The main advantage of trading using opposite Barings Us and California Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Us position performs unexpectedly, California Bond 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 California Bond will offset losses from the drop in California Bond's long position.| Barings Us vs. Allianzgi Convertible Income | Barings Us vs. Fidelity Sai Convertible | Barings Us vs. Calamos Dynamic Convertible | Barings Us vs. Absolute Convertible Arbitrage |
| California Bond vs. T Rowe Price | California Bond vs. Growth Portfolio Class | California Bond vs. Ab Global Bond | California Bond vs. Tax Managed Large 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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