Correlation Between Royce Opportunity and Barings Global

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

By analyzing existing cross correlation between Royce Opportunity Fund and Barings Global Floating, you can compare the effects of market volatilities on Royce Opportunity and Barings Global 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 Royce Opportunity with a short position of Barings Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royce Opportunity and Barings Global.

Diversification Opportunities for Royce Opportunity and Barings Global

-0.48

Correlation Coefficient

Royce Opportunity  Barings Global

Very good diversification

The 3 months correlation between Royce and Barings is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Royce Opportunity Fund and Barings Global Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Global Floating and Royce Opportunity 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 Royce Opportunity Fund are associated (or correlated) with Barings Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Global Floating has no effect on the direction of Royce Opportunity i.e., Royce Opportunity and Barings Global go up and down completely randomly.

Pair Corralation between Royce Opportunity and Barings Global

Assuming the 90 days horizon Royce Opportunity Fund is expected to under-perform the Barings Global. In addition to that, Royce Opportunity is 9.75 times more volatile than Barings Global Floating. It trades about -0.03 of its total potential returns per unit of risk. Barings Global Floating is currently generating about 0.16 per unit of volatility. If you would invest  847.00  in Barings Global Floating on December 5, 2024 and sell it today you would earn a total of  25.00  from holding Barings Global Floating or generate 2.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Royce Opportunity Fund  vs.  Barings Global Floating

Royce Opportunity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Royce Opportunity Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Barings Global Floating

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Barings Global Floating are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Barings Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Royce Opportunity and Barings Global

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

The idea behind Royce Opportunity Fund and Barings Global Floating 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.