Correlation Between Century Small and Barings Global
Can any of the company-specific risk be diversified away by investing in both Century Small and Barings Global 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 Century Small and Barings Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Small Cap and Barings Global Floating, you can compare the effects of market volatilities on Century Small and Barings Global 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 Century Small with a short position of Barings Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Small and Barings Global.
Diversification Opportunities for Century Small and Barings Global
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Century and Barings is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Century Small Cap and Barings Global Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Global Floating and Century Small 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 Century Small Cap are associated (or correlated) with Barings Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Global Floating has no effect on the direction of Century Small i.e., Century Small and Barings Global go up and down completely randomly.
Pair Corralation between Century Small and Barings Global
Assuming the 90 days horizon Century Small is expected to generate 2.16 times less return on investment than Barings Global. In addition to that, Century Small is 7.52 times more volatile than Barings Global Floating. It trades about 0.02 of its total potential returns per unit of risk. Barings Global Floating is currently generating about 0.37 per unit of volatility. If you would invest 870.00 in Barings Global Floating on September 14, 2024 and sell it today you would earn a total of 9.00 from holding Barings Global Floating or generate 1.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Small Cap vs. Barings Global Floating
Performance |
| Timeline |
| Century Small Cap |
| Barings Global Floating |
Century Small and Barings Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Small and Barings Global
The main advantage of trading using opposite Century Small and Barings Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Small position performs unexpectedly, Barings Global 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 Global will offset losses from the drop in Barings Global's long position.| Century Small vs. Third Avenue Real | Century Small vs. Aegis Value Fund | Century Small vs. Litman Gregory Masters | Century Small vs. Marsico Growth Fund |
| Barings Global vs. Boston Partners Longshort | Barings Global vs. Barings Active Short | Barings Global vs. Quantitative Longshort Equity | Barings Global vs. Siit Ultra Short |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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