Correlation Between Capital World and Barings Active
Can any of the company-specific risk be diversified away by investing in both Capital World 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 Capital World and Barings Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital World Growth and Barings Active Short, you can compare the effects of market volatilities on Capital World 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 Capital World with a short position of Barings Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital World and Barings Active.
Diversification Opportunities for Capital World and Barings Active
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Capital and Barings is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Capital World Growth 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 Capital World 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 Capital World Growth 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 Capital World i.e., Capital World and Barings Active go up and down completely randomly.
Pair Corralation between Capital World and Barings Active
Assuming the 90 days horizon Capital World Growth is expected to generate 5.02 times more return on investment than Barings Active. However, Capital World is 5.02 times more volatile than Barings Active Short. It trades about 0.17 of its potential returns per unit of risk. Barings Active Short is currently generating about 0.09 per unit of risk. If you would invest 6,711 in Capital World Growth on September 1, 2024 and sell it today you would earn a total of 151.00 from holding Capital World Growth or generate 2.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Capital World Growth vs. Barings Active Short
Performance |
| Timeline |
| Capital World Growth |
| Barings Active Short |
Capital World and Barings Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital World and Barings Active
The main advantage of trading using opposite Capital World and Barings Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital World 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.| Capital World vs. Barings Active Short | Capital World vs. Quantitative Longshort Equity | Capital World vs. Angel Oak Ultrashort | Capital World vs. Jhancock Short Duration |
| Barings Active vs. Ab Bond Inflation | Barings Active vs. Western Asset Inflation | Barings Active vs. Blackrock Inflation Protected | Barings Active vs. Aqr Managed Futures |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |