Correlation Between Inverse Government and Barings Global

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

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

Diversification Opportunities for Inverse Government and Barings Global

0.0

Correlation Coefficient

Inverse Government  Barings Global

Pay attention - limited upside

The 3 months correlation between Inverse and Barings is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Inverse Government Long and Barings Global Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Global Emerging and Inverse Government 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 Inverse Government Long 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 Emerging has no effect on the direction of Inverse Government i.e., Inverse Government and Barings Global go up and down completely randomly.

Pair Corralation between Inverse Government and Barings Global

Assuming the 90 days horizon Inverse Government Long is expected to generate 1.39 times more return on investment than Barings Global. However, Inverse Government is 1.39 times more volatile than Barings Global Emerging. It trades about 0.03 of its potential returns per unit of risk. Barings Global Emerging is currently generating about 0.0 per unit of risk. If you would invest  16,553  in Inverse Government Long on October 10, 2024 and sell it today you would earn a total of  2,109  from holding Inverse Government Long or generate 12.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	94.08%
Values	Daily Returns

Inverse Government Long  vs.  Barings Global Emerging

Inverse Government Long

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inverse Government Long has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Inverse Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Barings Global Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barings Global Emerging has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic 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 Inverse Government and Barings Global

The main advantage of trading using opposite Inverse Government and Barings Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inverse Government 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 Inverse Government Long and Barings Global Emerging 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.