Correlation Between Barings Global and Barings Active
Can any of the company-specific risk be diversified away by investing in both Barings Global and Barings Active 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 Global and Barings Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings Global Credit and Barings Active Short, you can compare the effects of market volatilities on Barings Global and Barings Active 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 Global with a short position of Barings Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Global and Barings Active.
Diversification Opportunities for Barings Global and Barings Active
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Barings and Barings is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Barings Global Credit and Barings Active Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Active Short and Barings Global 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 Global Credit are associated (or correlated) with Barings Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Active Short has no effect on the direction of Barings Global i.e., Barings Global and Barings Active go up and down completely randomly.
Pair Corralation between Barings Global and Barings Active
Assuming the 90 days horizon Barings Global Credit is expected to generate 0.97 times more return on investment than Barings Active. However, Barings Global Credit is 1.03 times less risky than Barings Active. It trades about 0.26 of its potential returns per unit of risk. Barings Active Short is currently generating about 0.11 per unit of risk. If you would invest 768.00 in Barings Global Credit on August 30, 2024 and sell it today you would earn a total of 6.00 from holding Barings Global Credit or generate 0.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Barings Global Credit vs. Barings Active Short
Performance |
| Timeline |
| Barings Global Credit |
| Barings Active Short |
Barings Global and Barings Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Global and Barings Active
The main advantage of trading using opposite Barings Global and Barings Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Global position performs unexpectedly, Barings Active 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 Barings Active will offset losses from the drop in Barings Active's long position.| Barings Global vs. Barings Active Short | Barings Global vs. Barings Emerging Markets | Barings Global vs. Barings Emerging Markets | Barings Global vs. Barings Active Short |
| Barings Active vs. Barings Active Short | Barings Active vs. Barings Emerging Markets | Barings Active vs. Barings Emerging Markets | Barings Active 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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