Correlation Between Vanguard Momentum and Barings Global
Can any of the company-specific risk be diversified away by investing in both Vanguard Momentum and Barings Global 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 Momentum and Barings Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Momentum Factor and Barings Global Short, you can compare the effects of market volatilities on Vanguard Momentum and Barings Global 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 Momentum with a short position of Barings Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Momentum and Barings Global.
Diversification Opportunities for Vanguard Momentum and Barings Global
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Barings is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Momentum Factor and Barings Global Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Global Short and Vanguard Momentum 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 Momentum Factor are associated (or correlated) with Barings Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Global Short has no effect on the direction of Vanguard Momentum i.e., Vanguard Momentum and Barings Global go up and down completely randomly.
Pair Corralation between Vanguard Momentum and Barings Global
Given the investment horizon of 90 days Vanguard Momentum Factor is expected to generate 1.01 times more return on investment than Barings Global. However, Vanguard Momentum is 1.01 times more volatile than Barings Global Short. It trades about 0.29 of its potential returns per unit of risk. Barings Global Short is currently generating about 0.17 per unit of risk. If you would invest 16,397 in Vanguard Momentum Factor on August 31, 2024 and sell it today you would earn a total of 1,363 from holding Vanguard Momentum Factor or generate 8.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Vanguard Momentum Factor vs. Barings Global Short
Performance |
| Timeline |
| Vanguard Momentum Factor |
| Barings Global Short |
Vanguard Momentum and Barings Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Momentum and Barings Global
The main advantage of trading using opposite Vanguard Momentum and Barings Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Momentum position performs unexpectedly, Barings Global 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 Global will offset losses from the drop in Barings Global's long position.| Vanguard Momentum vs. Vanguard Quality Factor | Vanguard Momentum vs. Vanguard Multifactor | Vanguard Momentum vs. Vanguard Value Factor | Vanguard Momentum vs. Vanguard Minimum Volatility |
| Barings Global vs. Eaton Vance National | Barings Global vs. Invesco High Income | Barings Global vs. Blackrock Muniholdings Ny | Barings Global vs. Nuveen California Select |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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