Correlation Between Barings Us and Ab Global

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

Diversification Opportunities for Barings Us and Ab Global

0.54

Correlation Coefficient

Barings Us  Ab Global

Very weak diversification

The 3 months correlation between Barings and GCEAX is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Barings High Yield and Ab Global E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Global E 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 Ab Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Global E has no effect on the direction of Barings Us i.e., Barings Us and Ab Global go up and down completely randomly.

Pair Corralation between Barings Us and Ab Global

Assuming the 90 days horizon Barings Us is expected to generate 1.5 times less return on investment than Ab Global. But when comparing it to its historical volatility, Barings High Yield is 2.71 times less risky than Ab Global. It trades about 0.11 of its potential returns per unit of risk. Ab Global E is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,377  in Ab Global E on October 9, 2024 and sell it today you would earn a total of  329.00  from holding Ab Global E or generate 23.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Barings High Yield  vs.  Ab Global E

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.

Ab Global E

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Barings High Yield and Ab Global E 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.