Correlation Between Barings Global and SISF BRIC

Can any of the company-specific risk be diversified away by investing in both Barings Global and SISF BRIC 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 SISF BRIC 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 SISF BRIC AC, you can compare the effects of market volatilities on Barings Global and SISF BRIC 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 SISF BRIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Global and SISF BRIC.

Diversification Opportunities for Barings Global and SISF BRIC

-0.06

Correlation Coefficient

Barings Global  SISF BRIC

Good diversification

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

Pair Corralation between Barings Global and SISF BRIC

Assuming the 90 days trading horizon Barings Global is expected to generate 2.31 times less return on investment than SISF BRIC. But when comparing it to its historical volatility, Barings Global Umbrella is 2.89 times less risky than SISF BRIC. It trades about 0.07 of its potential returns per unit of risk. SISF BRIC AC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  18,595  in SISF BRIC AC on September 26, 2024 and sell it today you would earn a total of  2,777  from holding SISF BRIC AC or generate 14.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	43.37%
Values	Daily Returns

Barings Global Umbrella  vs.  SISF BRIC AC

Barings Global Umbrella

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Barings Global Umbrella are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat unsteady basic indicators, Barings Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SISF BRIC AC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SISF BRIC AC are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical and fundamental indicators, SISF BRIC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Barings Global and SISF BRIC

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

The idea behind Barings Global Umbrella and SISF BRIC AC 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.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.