Correlation Between Floating Rate and Barings Global
Can any of the company-specific risk be diversified away by investing in both Floating Rate 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 Floating Rate and Barings Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Floating Rate Fund and Barings Global Floating, you can compare the effects of market volatilities on Floating Rate 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 Floating Rate with a short position of Barings Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Floating Rate and Barings Global.
Diversification Opportunities for Floating Rate and Barings Global
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Floating and Barings is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Floating Rate Fund 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 Floating Rate 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 Floating Rate Fund 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 Floating Rate i.e., Floating Rate and Barings Global go up and down completely randomly.
Pair Corralation between Floating Rate and Barings Global
Assuming the 90 days horizon Floating Rate is expected to generate 1.01 times less return on investment than Barings Global. But when comparing it to its historical volatility, Floating Rate Fund is 1.05 times less risky than Barings Global. It trades about 0.23 of its potential returns per unit of risk. Barings Global Floating is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 716.00 in Barings Global Floating on August 24, 2024 and sell it today you would earn a total of 161.00 from holding Barings Global Floating or generate 22.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Floating Rate Fund vs. Barings Global Floating
Performance |
| Timeline |
| Floating Rate |
| Barings Global Floating |
Floating Rate and Barings Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Floating Rate and Barings Global
The main advantage of trading using opposite Floating Rate and Barings Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Floating Rate 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.| Floating Rate vs. Siit High Yield | Floating Rate vs. Ab Global Risk | Floating Rate vs. Artisan High Income | Floating Rate vs. Pace High Yield |
| Barings Global vs. Metropolitan West High | Barings Global vs. Pace High Yield | Barings Global vs. California High Yield Municipal | Barings Global vs. Alliancebernstein Global High |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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