Correlation Between Royce Premier and Barings Active
Can any of the company-specific risk be diversified away by investing in both Royce Premier 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 Royce Premier and Barings Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royce Premier Fund and Barings Active Short, you can compare the effects of market volatilities on Royce Premier 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 Royce Premier with a short position of Barings Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royce Premier and Barings Active.
Diversification Opportunities for Royce Premier and Barings Active
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Royce and Barings is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Royce Premier Fund 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 Royce Premier 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 Royce Premier Fund 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 Royce Premier i.e., Royce Premier and Barings Active go up and down completely randomly.
Pair Corralation between Royce Premier and Barings Active
Assuming the 90 days horizon Royce Premier Fund is expected to generate 7.2 times more return on investment than Barings Active. However, Royce Premier is 7.2 times more volatile than Barings Active Short. It trades about 0.04 of its potential returns per unit of risk. Barings Active Short is currently generating about 0.2 per unit of risk. If you would invest 1,137 in Royce Premier Fund on September 2, 2024 and sell it today you would earn a total of 176.00 from holding Royce Premier Fund or generate 15.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royce Premier Fund vs. Barings Active Short
Performance |
| Timeline |
| Royce Premier |
| Barings Active Short |
Royce Premier and Barings Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royce Premier and Barings Active
The main advantage of trading using opposite Royce Premier and Barings Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royce Premier 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.| Royce Premier vs. Energy Services Fund | Royce Premier vs. Goehring Rozencwajg Resources | Royce Premier vs. Oil Gas Ultrasector | Royce Premier vs. Tortoise Energy Independence |
| Barings Active vs. Bbh Intermediate Municipal | Barings Active vs. Alliancebernstein National Municipal | Barings Active vs. Franklin High Yield | Barings Active vs. Nuveen Minnesota Municipal |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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