Correlation Between Vanguard Explorer and Barings Active
Can any of the company-specific risk be diversified away by investing in both Vanguard Explorer 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 Vanguard Explorer and Barings Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Explorer Value and Barings Active Short, you can compare the effects of market volatilities on Vanguard Explorer 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 Vanguard Explorer with a short position of Barings Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Explorer and Barings Active.
Diversification Opportunities for Vanguard Explorer and Barings Active
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Vanguard and Barings is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Explorer Value 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 Vanguard Explorer 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 Vanguard Explorer Value 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 Vanguard Explorer i.e., Vanguard Explorer and Barings Active go up and down completely randomly.
Pair Corralation between Vanguard Explorer and Barings Active
Assuming the 90 days horizon Vanguard Explorer Value is expected to generate 8.3 times more return on investment than Barings Active. However, Vanguard Explorer is 8.3 times more volatile than Barings Active Short. It trades about 0.1 of its potential returns per unit of risk. Barings Active Short is currently generating about 0.22 per unit of risk. If you would invest 3,973 in Vanguard Explorer Value on August 26, 2024 and sell it today you would earn a total of 1,300 from holding Vanguard Explorer Value or generate 32.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Explorer Value vs. Barings Active Short
Performance |
| Timeline |
| Vanguard Explorer Value |
| Barings Active Short |
Vanguard Explorer and Barings Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Explorer and Barings Active
The main advantage of trading using opposite Vanguard Explorer and Barings Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Explorer 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.| Vanguard Explorer vs. Vanguard Strategic Small Cap | Vanguard Explorer vs. Vanguard Emerging Markets | Vanguard Explorer vs. Vanguard Diversified Equity | Vanguard Explorer vs. Vanguard Mid Cap |
| Barings Active vs. Barings Emerging Markets | Barings Active vs. Barings Emerging Markets | Barings Active vs. Barings Global Floating | 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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