Correlation Between Barings Global and Barings Emerging
Can any of the company-specific risk be diversified away by investing in both Barings Global and Barings Emerging 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 Global and Barings Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings Global Credit and Barings Emerging Markets, you can compare the effects of market volatilities on Barings Global and Barings Emerging 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 Global with a short position of Barings Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Global and Barings Emerging.
Diversification Opportunities for Barings Global and Barings Emerging
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Barings and Barings is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Barings Global Credit and Barings Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Emerging Markets and Barings Global 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 Global Credit are associated (or correlated) with Barings Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Emerging Markets has no effect on the direction of Barings Global i.e., Barings Global and Barings Emerging go up and down completely randomly.
Pair Corralation between Barings Global and Barings Emerging
Assuming the 90 days horizon Barings Global Credit is expected to generate about the same return on investment as Barings Emerging Markets. But, Barings Global Credit is 2.03 times less risky than Barings Emerging. It trades about 0.16 of its potential returns per unit of risk. Barings Emerging Markets is currently generating about 0.08 per unit of risk. If you would invest 738.00 in Barings Emerging Markets on December 5, 2024 and sell it today you would earn a total of 22.00 from holding Barings Emerging Markets or generate 2.98% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 99.19% |
Values | Daily Returns |
Barings Global Credit vs. Barings Emerging Markets
Performance |
Timeline |
Barings Global Credit |
Barings Emerging Markets |
Barings Global and Barings Emerging Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Barings Global and Barings Emerging
The main advantage of trading using opposite Barings Global and Barings Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Global position performs unexpectedly, Barings Emerging 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 Barings Emerging will offset losses from the drop in Barings Emerging's long position.Barings Global vs. Federated Government Income | Barings Global vs. Us Government Securities | Barings Global vs. Us Government Securities | Barings Global vs. Inverse Government Long |
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Check out your portfolio center.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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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