Correlation Between Barings Global and Pacific Funds

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

Diversification Opportunities for Barings Global and Pacific Funds

0.99

Correlation Coefficient

Barings Global  Pacific Funds

No risk reduction

The 3 months correlation between Barings and Pacific is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Barings Global Floating and Pacific Funds Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Funds Floating 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 Pacific Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Funds Floating has no effect on the direction of Barings Global i.e., Barings Global and Pacific Funds go up and down completely randomly.

Pair Corralation between Barings Global and Pacific Funds

Assuming the 90 days horizon Barings Global Floating is expected to under-perform the Pacific Funds. In addition to that, Barings Global is 1.9 times more volatile than Pacific Funds Floating. It trades about -0.12 of its total potential returns per unit of risk. Pacific Funds Floating is currently generating about -0.22 per unit of volatility. If you would invest  951.00  in Pacific Funds Floating on October 10, 2024 and sell it today you would lose (2.00) from holding Pacific Funds Floating or give up 0.21% of portfolio value over 90 days.

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

Barings Global Floating  vs.  Pacific Funds Floating

Barings Global Floating

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Barings Global Floating are ranked lower than 11 (%) 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.

Pacific Funds Floating

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Funds Floating are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Pacific Funds 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 Pacific Funds

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

The idea behind Barings Global Floating and Pacific Funds Floating 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.