Correlation Between Barings Us and Icon Bond

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

Diversification Opportunities for Barings Us and Icon Bond

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Barings and Icon is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Barings High Yield and Icon Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Bond 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 Icon Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Bond Fund has no effect on the direction of Barings Us i.e., Barings Us and Icon Bond go up and down completely randomly.

Pair Corralation between Barings Us and Icon Bond

Assuming the 90 days horizon Barings High Yield is expected to under-perform the Icon Bond. In addition to that, Barings Us is 1.07 times more volatile than Icon Bond Fund. It trades about -0.37 of its total potential returns per unit of risk. Icon Bond Fund is currently generating about -0.26 per unit of volatility. If you would invest  868.00  in Icon Bond Fund on October 10, 2024 and sell it today you would lose (7.00) from holding Icon Bond Fund or give up 0.81% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Barings High Yield  vs.  Icon Bond Fund

 Performance 
       Timeline  
Barings High Yield 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Icon Bond Fund 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Icon Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Icon Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Barings Us and Icon Bond Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Barings Us and Icon Bond

The main advantage of trading using opposite Barings Us and Icon Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Us position performs unexpectedly, Icon Bond 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 Icon Bond will offset losses from the drop in Icon Bond's long position.
The idea behind Barings High Yield and Icon Bond 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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