Correlation Between Barings Global and BlackRock Global

Can any of the company-specific risk be diversified away by investing in both Barings Global and BlackRock 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 Barings Global and BlackRock Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Barings Global Umbrella and BlackRock Global Funds, you can compare the effects of market volatilities on Barings Global and BlackRock 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 Barings Global with a short position of BlackRock Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Global and BlackRock Global.

Diversification Opportunities for Barings Global and BlackRock Global

0.06

Correlation Coefficient

Barings Global  BlackRock Global

Significant diversification

The 3 months correlation between Barings and BlackRock is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Barings Global Umbrella and BlackRock Global Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Global Funds and Barings Global 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 Barings Global Umbrella are associated (or correlated) with BlackRock Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Global Funds has no effect on the direction of Barings Global i.e., Barings Global and BlackRock Global go up and down completely randomly.

Pair Corralation between Barings Global and BlackRock Global

Assuming the 90 days trading horizon Barings Global Umbrella is expected to generate 0.54 times more return on investment than BlackRock Global. However, Barings Global Umbrella is 1.84 times less risky than BlackRock Global. It trades about 0.18 of its potential returns per unit of risk. BlackRock Global Funds is currently generating about 0.05 per unit of risk. If you would invest  708.00  in Barings Global Umbrella on October 23, 2024 and sell it today you would earn a total of  41.00  from holding Barings Global Umbrella or generate 5.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Barings Global Umbrella  vs.  BlackRock Global Funds

Barings Global Umbrella

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Barings Global Umbrella are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Barings Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BlackRock Global Funds

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Global Funds are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively steady basic indicators, BlackRock Global is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Barings Global and BlackRock Global

The main advantage of trading using opposite Barings Global and BlackRock Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Global position performs unexpectedly, BlackRock 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 BlackRock Global will offset losses from the drop in BlackRock Global's long position.

The idea behind Barings Global Umbrella and BlackRock Global Funds pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.