Correlation Between Power Global and Barings Global
Can any of the company-specific risk be diversified away by investing in both Power Global 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 Power Global and Barings Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Global Tactical and Barings Global Floating, you can compare the effects of market volatilities on Power Global 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 Power Global with a short position of Barings Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Global and Barings Global.
Diversification Opportunities for Power Global and Barings Global
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Power and Barings is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Power Global Tactical 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 Power 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 Power Global Tactical 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 Power Global i.e., Power Global and Barings Global go up and down completely randomly.
Pair Corralation between Power Global and Barings Global
Assuming the 90 days horizon Power Global Tactical is expected to generate 2.94 times more return on investment than Barings Global. However, Power Global is 2.94 times more volatile than Barings Global Floating. It trades about 0.15 of its potential returns per unit of risk. Barings Global Floating is currently generating about 0.21 per unit of risk. If you would invest 927.00 in Power Global Tactical on September 1, 2024 and sell it today you would earn a total of 193.00 from holding Power Global Tactical or generate 20.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Global Tactical vs. Barings Global Floating
Performance |
| Timeline |
| Power Global Tactical |
| Barings Global Floating |
Power Global and Barings Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Global and Barings Global
The main advantage of trading using opposite Power Global and Barings Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Global 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.| Power Global vs. Old Westbury Large | Power Global vs. Principal Lifetime Hybrid | Power Global vs. Aqr Large Cap | Power Global vs. Jhancock Disciplined Value |
| Barings Global vs. Ashmore Emerging Markets | Barings Global vs. Dws Emerging Markets | Barings Global vs. Rbc Emerging Markets | Barings Global vs. Franklin Emerging Market |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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