Correlation Between Barings Us and Rbb Fund

Can any of the company-specific risk be diversified away by investing in both Barings Us and Rbb 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 Us and Rbb Fund 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 Rbb Fund , you can compare the effects of market volatilities on Barings Us and Rbb 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 Us with a short position of Rbb Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Us and Rbb Fund.

Diversification Opportunities for Barings Us and Rbb Fund

0.63

Correlation Coefficient

Barings Us  Rbb Fund

Poor diversification

The 3 months correlation between Barings and Rbb is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Barings High Yield and Rbb Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rbb Fund 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 Rbb Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rbb Fund has no effect on the direction of Barings Us i.e., Barings Us and Rbb Fund go up and down completely randomly.

Pair Corralation between Barings Us and Rbb Fund

Assuming the 90 days horizon Barings High Yield is expected to generate 0.22 times more return on investment than Rbb Fund. However, Barings High Yield is 4.52 times less risky than Rbb Fund. It trades about -0.37 of its potential returns per unit of risk. Rbb Fund is currently generating about -0.32 per unit of risk. If you would invest  821.00  in Barings High Yield on October 9, 2024 and sell it today you would lose (10.00) from holding Barings High Yield or give up 1.22% of portfolio value over 90 days.

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

Barings High Yield  vs.  Rbb Fund

Barings High Yield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barings High Yield has generated negative risk-adjusted returns adding no value to fund investors. 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.

Rbb Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rbb Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Rbb Fund 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 Rbb Fund

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

The idea behind Barings High Yield and Rbb Fund 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.