Correlation Between Versatile Bond and Barings Active
Can any of the company-specific risk be diversified away by investing in both Versatile Bond and Barings Active 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 Versatile Bond and Barings Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Versatile Bond Portfolio and Barings Active Short, you can compare the effects of market volatilities on Versatile Bond and Barings Active 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 Versatile Bond with a short position of Barings Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Versatile Bond and Barings Active.
Diversification Opportunities for Versatile Bond and Barings Active
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Versatile and Barings is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Versatile Bond Portfolio and Barings Active Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Active Short and Versatile Bond 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 Versatile Bond Portfolio are associated (or correlated) with Barings Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Active Short has no effect on the direction of Versatile Bond i.e., Versatile Bond and Barings Active go up and down completely randomly.
Pair Corralation between Versatile Bond and Barings Active
Assuming the 90 days horizon Versatile Bond Portfolio is expected to under-perform the Barings Active. But the mutual fund apears to be less risky and, when comparing its historical volatility, Versatile Bond Portfolio is 1.24 times less risky than Barings Active. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Barings Active Short is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 920.00 in Barings Active Short on August 28, 2024 and sell it today you would earn a total of 2.00 from holding Barings Active Short or generate 0.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Versatile Bond Portfolio vs. Barings Active Short
Performance |
| Timeline |
| Versatile Bond Portfolio |
| Barings Active Short |
Versatile Bond and Barings Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Versatile Bond and Barings Active
The main advantage of trading using opposite Versatile Bond and Barings Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Versatile Bond position performs unexpectedly, Barings Active 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 Active will offset losses from the drop in Barings Active's long position.| Versatile Bond vs. Permanent Portfolio Class | Versatile Bond vs. Permanent Portfolio Class | Versatile Bond vs. Permanent Portfolio Class | Versatile Bond vs. Short Term Treasury Portfolio |
| Barings Active vs. Janus Global Technology | Barings Active vs. Invesco Technology Fund | Barings Active vs. Janus Global Technology | Barings Active vs. Towpath Technology |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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