Correlation Between Barings Us and Saat Defensive

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

Diversification Opportunities for Barings Us and Saat Defensive

0.64

Correlation Coefficient

Barings Us  Saat Defensive

Poor diversification

The 3 months correlation between Barings and Saat is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Barings High Yield and Saat Defensive Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saat Defensive 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 Saat Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saat Defensive Strategy has no effect on the direction of Barings Us i.e., Barings Us and Saat Defensive go up and down completely randomly.

Pair Corralation between Barings Us and Saat Defensive

Assuming the 90 days horizon Barings High Yield is expected to under-perform the Saat Defensive. But the mutual fund apears to be less risky and, when comparing its historical volatility, Barings High Yield is 1.58 times less risky than Saat Defensive. The mutual fund trades about -0.37 of its potential returns per unit of risk. The Saat Defensive Strategy is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest  1,126  in Saat Defensive Strategy on October 12, 2024 and sell it today you would lose (12.00) from holding Saat Defensive Strategy or give up 1.07% 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.  Saat Defensive Strategy

Barings High Yield

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Barings High Yield are ranked lower than 2 (%) 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.

Saat Defensive Strategy

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Barings High Yield and Saat Defensive Strategy 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 Anywhere module to track or share privately all of your investments from the convenience of any device.