Correlation Between Pax Small and Barings Emerging
Can any of the company-specific risk be diversified away by investing in both Pax Small 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 Pax Small and Barings Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pax Small Cap and Barings Emerging Markets, you can compare the effects of market volatilities on Pax Small 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 Pax Small with a short position of Barings Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pax Small and Barings Emerging.
Diversification Opportunities for Pax Small and Barings Emerging
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pax and Barings is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Pax Small Cap 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 Pax Small 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 Pax Small Cap 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 Pax Small i.e., Pax Small and Barings Emerging go up and down completely randomly.
Pair Corralation between Pax Small and Barings Emerging
Assuming the 90 days horizon Pax Small Cap is expected to generate 4.3 times more return on investment than Barings Emerging. However, Pax Small is 4.3 times more volatile than Barings Emerging Markets. It trades about 0.28 of its potential returns per unit of risk. Barings Emerging Markets is currently generating about 0.0 per unit of risk. If you would invest 1,793 in Pax Small Cap on August 29, 2024 and sell it today you would earn a total of 159.00 from holding Pax Small Cap or generate 8.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pax Small Cap vs. Barings Emerging Markets
Performance |
| Timeline |
| Pax Small Cap |
| Barings Emerging Markets |
Pax Small and Barings Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pax Small and Barings Emerging
The main advantage of trading using opposite Pax Small and Barings Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pax Small 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.| Pax Small vs. Vanguard Emerging Markets | Pax Small vs. Shelton Emerging Markets | Pax Small vs. Rbc Emerging Markets | Pax Small vs. Artisan Emerging Markets |
| Barings Emerging vs. Fidelity New Markets | Barings Emerging vs. HUMANA INC | Barings Emerging vs. Aquagold International | Barings Emerging vs. Barloworld Ltd ADR |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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