Correlation Between Barrow Hanley and Advisors Inner

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

By analyzing existing cross correlation between Barrow Hanley Value and Advisors Inner Circle, you can compare the effects of market volatilities on Barrow Hanley and Advisors Inner 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 Barrow Hanley with a short position of Advisors Inner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrow Hanley and Advisors Inner.

Diversification Opportunities for Barrow Hanley and Advisors Inner

-0.11

Correlation Coefficient

Barrow Hanley  Advisors Inner

Good diversification

The 3 months correlation between Barrow and Advisors is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Barrow Hanley Value and Advisors Inner Circle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advisors Inner Circle and Barrow Hanley 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 Barrow Hanley Value are associated (or correlated) with Advisors Inner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advisors Inner Circle has no effect on the direction of Barrow Hanley i.e., Barrow Hanley and Advisors Inner go up and down completely randomly.

Pair Corralation between Barrow Hanley and Advisors Inner

Assuming the 90 days horizon Barrow Hanley Value is expected to under-perform the Advisors Inner. But the mutual fund apears to be less risky and, when comparing its historical volatility, Barrow Hanley Value is 1.08 times less risky than Advisors Inner. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Advisors Inner Circle is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  852.00  in Advisors Inner Circle on December 27, 2024 and sell it today you would earn a total of  46.00  from holding Advisors Inner Circle or generate 5.4% return on investment over 90 days.

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

Barrow Hanley Value  vs.  Advisors Inner Circle

Barrow Hanley Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days Barrow Hanley Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Barrow Hanley is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Advisors Inner Circle

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advisors Inner Circle are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Advisors Inner is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Barrow Hanley and Advisors Inner

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

The idea behind Barrow Hanley Value and Advisors Inner Circle 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.