Correlation Between Barings Corporate and Sprott Focus

Can any of the company-specific risk be diversified away by investing in both Barings Corporate and Sprott Focus 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 Corporate and Sprott Focus into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Barings Corporate Investors and Sprott Focus Trust, you can compare the effects of market volatilities on Barings Corporate and Sprott Focus 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 Corporate with a short position of Sprott Focus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Corporate and Sprott Focus.

Diversification Opportunities for Barings Corporate and Sprott Focus

0.65

Correlation Coefficient

Barings Corporate  Sprott Focus

Poor diversification

The 3 months correlation between Barings and Sprott is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Barings Corporate Investors and Sprott Focus Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Focus Trust and Barings Corporate 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 Corporate Investors are associated (or correlated) with Sprott Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Focus Trust has no effect on the direction of Barings Corporate i.e., Barings Corporate and Sprott Focus go up and down completely randomly.

Pair Corralation between Barings Corporate and Sprott Focus

Considering the 90-day investment horizon Barings Corporate Investors is expected to generate 2.43 times more return on investment than Sprott Focus. However, Barings Corporate is 2.43 times more volatile than Sprott Focus Trust. It trades about 0.05 of its potential returns per unit of risk. Sprott Focus Trust is currently generating about 0.05 per unit of risk. If you would invest  1,935  in Barings Corporate Investors on December 20, 2024 and sell it today you would earn a total of  95.00  from holding Barings Corporate Investors or generate 4.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Barings Corporate Investors  vs.  Sprott Focus Trust

Barings Corporate

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Barings Corporate Investors are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Barings Corporate is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Sprott Focus Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Focus Trust are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Sprott Focus is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Barings Corporate and Sprott Focus

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

The idea behind Barings Corporate Investors and Sprott Focus Trust 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.