Correlation Between Barings Emerging and Community Reinvestment

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

By analyzing existing cross correlation between Barings Emerging Markets and Community Reinvestment Act, you can compare the effects of market volatilities on Barings Emerging and Community Reinvestment 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 Emerging with a short position of Community Reinvestment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and Community Reinvestment.

Diversification Opportunities for Barings Emerging and Community Reinvestment

0.55

Correlation Coefficient

Barings Emerging  Community Reinvestment

Very weak diversification

The 3 months correlation between Barings and Community is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets and Community Reinvestment Act in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Reinvestment and Barings Emerging 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 Emerging Markets are associated (or correlated) with Community Reinvestment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Reinvestment has no effect on the direction of Barings Emerging i.e., Barings Emerging and Community Reinvestment go up and down completely randomly.

Pair Corralation between Barings Emerging and Community Reinvestment

Assuming the 90 days horizon Barings Emerging is expected to generate 2.45 times less return on investment than Community Reinvestment. In addition to that, Barings Emerging is 1.13 times more volatile than Community Reinvestment Act. It trades about 0.04 of its total potential returns per unit of risk. Community Reinvestment Act is currently generating about 0.11 per unit of volatility. If you would invest  942.00  in Community Reinvestment Act on September 5, 2024 and sell it today you would earn a total of  6.00  from holding Community Reinvestment Act or generate 0.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Barings Emerging Markets  vs.  Community Reinvestment Act

Barings Emerging Markets

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Barings Emerging Markets are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Barings Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Community Reinvestment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Barings Emerging and Community Reinvestment

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

The idea behind Barings Emerging Markets and Community Reinvestment Act 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.