Correlation Between Equity Income and Barings Active
Can any of the company-specific risk be diversified away by investing in both Equity Income 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 Equity Income and Barings Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Income Fund and Barings Active Short, you can compare the effects of market volatilities on Equity Income 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 Equity Income with a short position of Barings Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Income and Barings Active.
Diversification Opportunities for Equity Income and Barings Active
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Equity and Barings is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Equity Income 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 Equity Income 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 Equity Income 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 Equity Income i.e., Equity Income and Barings Active go up and down completely randomly.
Pair Corralation between Equity Income and Barings Active
Assuming the 90 days horizon Equity Income Fund is expected to generate 3.85 times more return on investment than Barings Active. However, Equity Income is 3.85 times more volatile than Barings Active Short. It trades about 0.24 of its potential returns per unit of risk. Barings Active Short is currently generating about 0.11 per unit of risk. If you would invest 940.00 in Equity Income Fund on August 30, 2024 and sell it today you would earn a total of 26.00 from holding Equity Income Fund or generate 2.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equity Income Fund vs. Barings Active Short
Performance |
| Timeline |
| Equity Income |
| Barings Active Short |
Equity Income and Barings Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Income and Barings Active
The main advantage of trading using opposite Equity Income and Barings Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Income 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.| Equity Income vs. Dodge Cox Stock | Equity Income vs. American Mutual Fund | Equity Income vs. American Funds American | Equity Income vs. American Funds American |
| Barings Active vs. Permanent Portfolio Class | Barings Active vs. HUMANA INC | Barings Active vs. Aquagold International | Barings Active 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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