Correlation Between Growth Fund and Barings Active
Can any of the company-specific risk be diversified away by investing in both Growth Fund 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 Growth Fund and Barings Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund Of and Barings Active Short, you can compare the effects of market volatilities on Growth Fund 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 Growth Fund with a short position of Barings Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Barings Active.
Diversification Opportunities for Growth Fund and Barings Active
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Growth and Barings is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of 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 Growth Fund 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 Growth Fund Of 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 Growth Fund i.e., Growth Fund and Barings Active go up and down completely randomly.
Pair Corralation between Growth Fund and Barings Active
Assuming the 90 days horizon Growth Fund Of is expected to generate 7.35 times more return on investment than Barings Active. However, Growth Fund is 7.35 times more volatile than Barings Active Short. It trades about 0.09 of its potential returns per unit of risk. Barings Active Short is currently generating about 0.23 per unit of risk. If you would invest 5,660 in Growth Fund Of on September 3, 2024 and sell it today you would earn a total of 1,746 from holding Growth Fund Of or generate 30.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Of vs. Barings Active Short
Performance |
| Timeline |
| Growth Fund |
| Barings Active Short |
Growth Fund and Barings Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Barings Active
The main advantage of trading using opposite Growth Fund and Barings Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund 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.| Growth Fund vs. Europacific Growth Fund | Growth Fund vs. Capital World Growth | Growth Fund vs. Smallcap World Fund | Growth Fund vs. American Balanced Fund |
| Barings Active vs. Blackrock Conservative Prprdptfinstttnl | Barings Active vs. Huber Capital Diversified | Barings Active vs. Delaware Limited Term Diversified | Barings Active vs. Jhancock Diversified Macro |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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