Correlation Between Barings Us and Dfa Social

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

Diversification Opportunities for Barings Us and Dfa Social

0.46

Correlation Coefficient

Barings Us  Dfa Social

Very weak diversification

The 3 months correlation between Barings and Dfa is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Barings High Yield and Dfa Social Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Social Fixed 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 Dfa Social. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Social Fixed has no effect on the direction of Barings Us i.e., Barings Us and Dfa Social go up and down completely randomly.

Pair Corralation between Barings Us and Dfa Social

Assuming the 90 days horizon Barings High Yield is expected to generate 0.64 times more return on investment than Dfa Social. However, Barings High Yield is 1.56 times less risky than Dfa Social. It trades about -0.37 of its potential returns per unit of risk. Dfa Social Fixed is currently generating about -0.49 per unit of risk. If you would invest  821.00  in Barings High Yield on October 10, 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	Weak
Accuracy	100.0%
Values	Daily Returns

Barings High Yield  vs.  Dfa Social Fixed

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.

Dfa Social Fixed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dfa Social Fixed has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Dfa Social 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 Dfa Social

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

The idea behind Barings High Yield and Dfa Social Fixed 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.