Correlation Between Barings Global and Government Fixed

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

By analyzing existing cross correlation between Barings Global Floating and The Government Fixed, you can compare the effects of market volatilities on Barings Global and Government Fixed 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 Government Fixed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Global and Government Fixed.

Diversification Opportunities for Barings Global and Government Fixed

-0.2

Correlation Coefficient

Barings Global  Government Fixed

Good diversification

The 3 months correlation between Barings and Government is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Barings Global Floating and The Government Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Government Fixed 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 Floating are associated (or correlated) with Government Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Government Fixed has no effect on the direction of Barings Global i.e., Barings Global and Government Fixed go up and down completely randomly.

Pair Corralation between Barings Global and Government Fixed

Assuming the 90 days horizon Barings Global Floating is expected to generate 0.5 times more return on investment than Government Fixed. However, Barings Global Floating is 1.99 times less risky than Government Fixed. It trades about 0.21 of its potential returns per unit of risk. The Government Fixed is currently generating about -0.11 per unit of risk. If you would invest  859.00  in Barings Global Floating on October 26, 2024 and sell it today you would earn a total of  17.00  from holding Barings Global Floating or generate 1.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Barings Global Floating  vs.  The Government Fixed

Barings Global Floating

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Barings Global Floating are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Barings Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Government Fixed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Government Fixed has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Government Fixed 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 Global and Government Fixed

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

The idea behind Barings Global Floating and The Government Fixed 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.