Correlation Between Adams Natural and Barings Emerging
Can any of the company-specific risk be diversified away by investing in both Adams Natural 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 Adams Natural and Barings Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adams Natural Resources and Barings Emerging Markets, you can compare the effects of market volatilities on Adams Natural 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 Adams Natural with a short position of Barings Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Natural and Barings Emerging.
Diversification Opportunities for Adams Natural and Barings Emerging
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Adams and Barings is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Adams Natural Resources 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 Adams Natural 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 Adams Natural Resources 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 Adams Natural i.e., Adams Natural and Barings Emerging go up and down completely randomly.
Pair Corralation between Adams Natural and Barings Emerging
Considering the 90-day investment horizon Adams Natural Resources is expected to under-perform the Barings Emerging. In addition to that, Adams Natural is 4.72 times more volatile than Barings Emerging Markets. It trades about -0.35 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 755.00 in Barings Emerging Markets on September 19, 2024 and sell it today you would lose (2.00) from holding Barings Emerging Markets or give up 0.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adams Natural Resources vs. Barings Emerging Markets
Performance |
| Timeline |
| Adams Natural Resources |
| Barings Emerging Markets |
Adams Natural and Barings Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adams Natural and Barings Emerging
The main advantage of trading using opposite Adams Natural and Barings Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Natural 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.| Adams Natural vs. Liberty All Star | Adams Natural vs. Tri Continental Closed | Adams Natural vs. Royce Value Closed | Adams Natural vs. Central Securities |
| Barings Emerging vs. Barings Active Short | Barings Emerging vs. Barings Emerging Markets | Barings Emerging vs. Barings Active Short | Barings Emerging vs. Barings Global Floating |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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