Correlation Between Steward Funds and Barings Active
Can any of the company-specific risk be diversified away by investing in both Steward Funds 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 Steward Funds and Barings Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steward Funds and Barings Active Short, you can compare the effects of market volatilities on Steward Funds 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 Steward Funds with a short position of Barings Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steward Funds and Barings Active.
Diversification Opportunities for Steward Funds and Barings Active
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Steward and Barings is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Steward Funds 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 Steward Funds 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 Steward Funds 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 Steward Funds i.e., Steward Funds and Barings Active go up and down completely randomly.
Pair Corralation between Steward Funds and Barings Active
Assuming the 90 days horizon Steward Funds is expected to generate 7.3 times more return on investment than Barings Active. However, Steward Funds is 7.3 times more volatile than Barings Active Short. It trades about 0.13 of its potential returns per unit of risk. Barings Active Short is currently generating about 0.24 per unit of risk. If you would invest 2,757 in Steward Funds on September 1, 2024 and sell it today you would earn a total of 444.00 from holding Steward Funds or generate 16.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steward Funds vs. Barings Active Short
Performance |
| Timeline |
| Steward Funds |
| Barings Active Short |
Steward Funds and Barings Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steward Funds and Barings Active
The main advantage of trading using opposite Steward Funds and Barings Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steward Funds 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.| Steward Funds vs. Steward Small Mid Cap | Steward Funds vs. Steward Small Mid Cap | Steward Funds vs. Steward Ered Call | Steward Funds vs. Steward Ered Call |
| Barings Active vs. Barings Active Short | Barings Active vs. Barings Emerging Markets | Barings Active vs. Barings Emerging Markets | Barings Active vs. Barings Global Floating |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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