Correlation Between Northern Quality and Barings Global
Can any of the company-specific risk be diversified away by investing in both Northern Quality 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 Northern Quality and Barings Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Quality Esg and Barings Global Floating, you can compare the effects of market volatilities on Northern Quality 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 Northern Quality with a short position of Barings Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Quality and Barings Global.
Diversification Opportunities for Northern Quality and Barings Global
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Northern and Barings is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Northern Quality Esg 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 Northern Quality 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 Northern Quality Esg 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 Northern Quality i.e., Northern Quality and Barings Global go up and down completely randomly.
Pair Corralation between Northern Quality and Barings Global
Assuming the 90 days horizon Northern Quality Esg is expected to generate 3.96 times more return on investment than Barings Global. However, Northern Quality is 3.96 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 0.37 per unit of risk. If you would invest 2,179 in Northern Quality Esg on September 12, 2024 and sell it today you would earn a total of 37.00 from holding Northern Quality Esg or generate 1.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Northern Quality Esg vs. Barings Global Floating
Performance |
| Timeline |
| Northern Quality Esg |
| Barings Global Floating |
Northern Quality and Barings Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Quality and Barings Global
The main advantage of trading using opposite Northern Quality and Barings Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Quality 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.| Northern Quality vs. Artisan High Income | Northern Quality vs. Siit High Yield | Northern Quality vs. Fa 529 Aggressive | Northern Quality vs. Intal High Relative |
| Barings Global vs. Janus High Yield Fund | Barings Global vs. Buffalo High Yield | Barings Global vs. Pace High Yield | Barings Global vs. Msift High Yield |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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