Correlation Between Barings Emerging and Federated Short

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

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

Diversification Opportunities for Barings Emerging and Federated Short

0.77

Correlation Coefficient

Barings Emerging  Federated Short

Poor diversification

The 3 months correlation between Barings and Federated is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets and Federated Short Intermediate T in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Short Inte and Barings Emerging 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 Emerging Markets are associated (or correlated) with Federated Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Short Inte has no effect on the direction of Barings Emerging i.e., Barings Emerging and Federated Short go up and down completely randomly.

Pair Corralation between Barings Emerging and Federated Short

Assuming the 90 days horizon Barings Emerging Markets is expected to under-perform the Federated Short. In addition to that, Barings Emerging is 1.89 times more volatile than Federated Short Intermediate Total. It trades about -0.2 of its total potential returns per unit of risk. Federated Short Intermediate Total is currently generating about -0.06 per unit of volatility. If you would invest  1,012  in Federated Short Intermediate Total on August 12, 2024 and sell it today you would lose (2.00) from holding Federated Short Intermediate Total or give up 0.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Barings Emerging Markets  vs.  Federated Short Intermediate T

Barings Emerging Markets

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Barings Emerging Markets are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Barings Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Federated Short Inte

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Short Intermediate Total are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Federated Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Barings Emerging and Federated Short

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

The idea behind Barings Emerging Markets and Federated Short Intermediate Total 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.