Correlation Between Barings Us and Ambrus Core

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

Diversification Opportunities for Barings Us and Ambrus Core

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Barings and Ambrus is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Barings High Yield and Ambrus Core Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambrus Core Bond 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 Ambrus Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambrus Core Bond has no effect on the direction of Barings Us i.e., Barings Us and Ambrus Core go up and down completely randomly.

Pair Corralation between Barings Us and Ambrus Core

Assuming the 90 days horizon Barings High Yield is expected to generate 1.02 times more return on investment than Ambrus Core. However, Barings Us is 1.02 times more volatile than Ambrus Core Bond. It trades about 0.3 of its potential returns per unit of risk. Ambrus Core Bond is currently generating about 0.09 per unit of risk. If you would invest  806.00  in Barings High Yield on October 26, 2024 and sell it today you would earn a total of  9.00  from holding Barings High Yield or generate 1.12% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Barings High Yield  vs.  Ambrus Core Bond

 Performance 
       Timeline  
Barings High Yield 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Barings High Yield are ranked lower than 11 (%) 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.
Ambrus Core Bond 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Ambrus Core Bond are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Ambrus Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Barings Us and Ambrus Core Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Barings Us and Ambrus Core

The main advantage of trading using opposite Barings Us and Ambrus Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Us position performs unexpectedly, Ambrus Core 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 Ambrus Core will offset losses from the drop in Ambrus Core's long position.
The idea behind Barings High Yield and Ambrus Core Bond 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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