Correlation Between Barings Global and Midcap Fund

Can any of the company-specific risk be diversified away by investing in both Barings Global and Midcap Fund 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 Midcap Fund 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 Midcap Fund R 4, you can compare the effects of market volatilities on Barings Global and Midcap Fund 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 Midcap Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Global and Midcap Fund.

Diversification Opportunities for Barings Global and Midcap Fund

-0.38

Correlation Coefficient

Barings Global  Midcap Fund

Very good diversification

The 3 months correlation between Barings and Midcap is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Barings Global Floating and Midcap Fund R 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midcap Fund R 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 Midcap Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midcap Fund R has no effect on the direction of Barings Global i.e., Barings Global and Midcap Fund go up and down completely randomly.

Pair Corralation between Barings Global and Midcap Fund

Assuming the 90 days horizon Barings Global is expected to generate 8.0 times less return on investment than Midcap Fund. But when comparing it to its historical volatility, Barings Global Floating is 6.16 times less risky than Midcap Fund. It trades about 0.21 of its potential returns per unit of risk. Midcap Fund R 4 is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  4,497  in Midcap Fund R 4 on October 25, 2024 and sell it today you would earn a total of  279.00  from holding Midcap Fund R 4 or generate 6.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	38.98%
Values	Daily Returns

Barings Global Floating  vs.  Midcap Fund R 4

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.

Midcap Fund R

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Midcap Fund R 4 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak basic indicators, Midcap Fund showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Barings Global and Midcap Fund

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

The idea behind Barings Global Floating and Midcap Fund R 4 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.