Correlation Between High Income and Barings Active
Can any of the company-specific risk be diversified away by investing in both High 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 High 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 High Income Fund and Barings Active Short, you can compare the effects of market volatilities on High 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 High Income with a short position of Barings Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Income and Barings Active.
Diversification Opportunities for High Income and Barings Active
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between High and Barings is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding High 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 High 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 High 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 High Income i.e., High Income and Barings Active go up and down completely randomly.
Pair Corralation between High Income and Barings Active
Assuming the 90 days horizon High Income Fund is expected to generate 1.51 times more return on investment than Barings Active. However, High Income is 1.51 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 0.2 per unit of risk. If you would invest 598.00 in High Income Fund on September 2, 2024 and sell it today you would earn a total of 94.00 from holding High Income Fund or generate 15.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Income Fund vs. Barings Active Short
Performance |
| Timeline |
| High Income Fund |
| Barings Active Short |
High Income and Barings Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Income and Barings Active
The main advantage of trading using opposite High Income and Barings Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High 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.| High Income vs. Vanguard Small Cap Growth | High Income vs. Nasdaq 100 Index Fund | High Income vs. Growth Opportunities Fund | High Income vs. Commonwealth Global Fund |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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