Correlation Between Barings Emerging and Vanguard Mid-cap
Can any of the company-specific risk be diversified away by investing in both Barings Emerging and Vanguard Mid-cap 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 Vanguard Mid-cap 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 Vanguard Mid Cap Index, you can compare the effects of market volatilities on Barings Emerging and Vanguard Mid-cap 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 Vanguard Mid-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and Vanguard Mid-cap.
Diversification Opportunities for Barings Emerging and Vanguard Mid-cap
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barings and Vanguard is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets and Vanguard Mid Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Mid Cap 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 Vanguard Mid-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Mid Cap has no effect on the direction of Barings Emerging i.e., Barings Emerging and Vanguard Mid-cap go up and down completely randomly.
Pair Corralation between Barings Emerging and Vanguard Mid-cap
Assuming the 90 days horizon Barings Emerging Markets is expected to generate 0.27 times more return on investment than Vanguard Mid-cap. However, Barings Emerging Markets is 3.7 times less risky than Vanguard Mid-cap. It trades about 0.27 of its potential returns per unit of risk. Vanguard Mid Cap Index is currently generating about -0.04 per unit of risk. If you would invest 728.00 in Barings Emerging Markets on December 29, 2024 and sell it today you would earn a total of 31.00 from holding Barings Emerging Markets or generate 4.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Barings Emerging Markets vs. Vanguard Mid Cap Index
Performance |
Timeline |
Barings Emerging Markets |
Vanguard Mid Cap |
Barings Emerging and Vanguard Mid-cap Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Barings Emerging and Vanguard Mid-cap
The main advantage of trading using opposite Barings Emerging and Vanguard Mid-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Emerging position performs unexpectedly, Vanguard Mid-cap 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 Vanguard Mid-cap will offset losses from the drop in Vanguard Mid-cap's long position.Barings Emerging vs. Barings Active Short | Barings Emerging vs. Barings Emerging Markets | Barings Emerging vs. Barings Active Short | Barings Emerging vs. Barings Global Floating |
Vanguard Mid-cap vs. Vanguard Materials Index | Vanguard Mid-cap vs. Vanguard Limited Term Tax Exempt | Vanguard Mid-cap vs. Vanguard Limited Term Tax Exempt | Vanguard Mid-cap vs. Vanguard Global Minimum |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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