Correlation Between Hartford International and Barings Emerging
Can any of the company-specific risk be diversified away by investing in both Hartford International and Barings Emerging 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 Hartford International and Barings Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Hartford International and Barings Emerging Markets, you can compare the effects of market volatilities on Hartford International and Barings Emerging 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 Hartford International with a short position of Barings Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford International and Barings Emerging.
Diversification Opportunities for Hartford International and Barings Emerging
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hartford and Barings is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford International and Barings Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Emerging Markets and Hartford International 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 The Hartford International are associated (or correlated) with Barings Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Emerging Markets has no effect on the direction of Hartford International i.e., Hartford International and Barings Emerging go up and down completely randomly.
Pair Corralation between Hartford International and Barings Emerging
Assuming the 90 days horizon The Hartford International is expected to under-perform the Barings Emerging. In addition to that, Hartford International is 2.52 times more volatile than Barings Emerging Markets. It trades about -0.13 of its total potential returns per unit of risk. Barings Emerging Markets is currently generating about 0.06 per unit of volatility. If you would invest 756.00 in Barings Emerging Markets on September 3, 2024 and sell it today you would earn a total of 3.00 from holding Barings Emerging Markets or generate 0.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hartford International vs. Barings Emerging Markets
Performance |
| Timeline |
| Hartford International |
| Barings Emerging Markets |
Hartford International and Barings Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hartford International and Barings Emerging
The main advantage of trading using opposite Hartford International and Barings Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford International position performs unexpectedly, Barings Emerging 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 Emerging will offset losses from the drop in Barings Emerging's long position.The idea behind The Hartford International and Barings Emerging Markets pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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