Correlation Between Barings Global and Finisterre Unconstrained

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

Diversification Opportunities for Barings Global and Finisterre Unconstrained

0.75

Correlation Coefficient

Barings Global  Finisterre Unconstrained

Poor diversification

The 3 months correlation between Barings and Finisterre is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Barings Global Floating and Finisterre Unconstrained Emerg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finisterre Unconstrained 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 Finisterre Unconstrained. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finisterre Unconstrained has no effect on the direction of Barings Global i.e., Barings Global and Finisterre Unconstrained go up and down completely randomly.

Pair Corralation between Barings Global and Finisterre Unconstrained

Assuming the 90 days horizon Barings Global is expected to generate 1.11 times less return on investment than Finisterre Unconstrained. But when comparing it to its historical volatility, Barings Global Floating is 1.35 times less risky than Finisterre Unconstrained. It trades about 0.2 of its potential returns per unit of risk. Finisterre Unconstrained Emerging is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  817.00  in Finisterre Unconstrained Emerging on October 24, 2024 and sell it today you would earn a total of  80.00  from holding Finisterre Unconstrained Emerging or generate 9.79% return on investment over 90 days.

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

Barings Global Floating  vs.  Finisterre Unconstrained Emerg

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.

Finisterre Unconstrained

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Finisterre Unconstrained Emerging are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Finisterre Unconstrained 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 Finisterre Unconstrained

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

The idea behind Barings Global Floating and Finisterre Unconstrained Emerging 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.