Correlation Between Barings Us and Braddock Multi-strategy

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

By analyzing existing cross correlation between Barings High Yield and Braddock Multi Strategy Income, you can compare the effects of market volatilities on Barings Us and Braddock Multi-strategy 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 Us with a short position of Braddock Multi-strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Us and Braddock Multi-strategy.

Diversification Opportunities for Barings Us and Braddock Multi-strategy

0.57

Correlation Coefficient

Barings Us  Braddock Multi-strategy

Very weak diversification

The 3 months correlation between Barings and Braddock is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Barings High Yield and Braddock Multi Strategy Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braddock Multi Strategy and Barings Us 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 High Yield are associated (or correlated) with Braddock Multi-strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Braddock Multi Strategy has no effect on the direction of Barings Us i.e., Barings Us and Braddock Multi-strategy go up and down completely randomly.

Pair Corralation between Barings Us and Braddock Multi-strategy

Assuming the 90 days horizon Barings Us is expected to generate 2.1 times less return on investment than Braddock Multi-strategy. In addition to that, Barings Us is 1.24 times more volatile than Braddock Multi Strategy Income. It trades about 0.12 of its total potential returns per unit of risk. Braddock Multi Strategy Income is currently generating about 0.32 per unit of volatility. If you would invest  648.00  in Braddock Multi Strategy Income on December 22, 2024 and sell it today you would earn a total of  19.00  from holding Braddock Multi Strategy Income or generate 2.93% return on investment over 90 days.

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

Barings High Yield  vs.  Braddock Multi Strategy Income

Barings High Yield

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Barings High Yield are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Barings Us is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Braddock Multi Strategy

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Braddock Multi Strategy Income are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Braddock Multi-strategy 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 Us and Braddock Multi-strategy

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

The idea behind Barings High Yield and Braddock Multi Strategy Income 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.