Correlation Between STADION TACTICAL and Barings Global

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

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

Diversification Opportunities for STADION TACTICAL and Barings Global

Weak diversification

The 3 months correlation between STADION and Barings is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding STADION TACTICAL DEFENSIVE and Barings Global Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Global Short and STADION TACTICAL 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 STADION TACTICAL DEFENSIVE 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 Short has no effect on the direction of STADION TACTICAL i.e., STADION TACTICAL and Barings Global go up and down completely randomly.

Pair Corralation between STADION TACTICAL and Barings Global

Assuming the 90 days horizon STADION TACTICAL DEFENSIVE is expected to generate 0.53 times more return on investment than Barings Global. However, STADION TACTICAL DEFENSIVE is 1.89 times less risky than Barings Global. It trades about -0.01 of its potential returns per unit of risk. Barings Global Short is currently generating about -0.02 per unit of risk. If you would invest  1,626  in STADION TACTICAL DEFENSIVE on July 2, 2023 and sell it today you would lose (47.00) from holding STADION TACTICAL DEFENSIVE or give up 2.89% of portfolio value over 90 days.

STADION TACTICAL DEFENSIVE  vs.  Barings Global Short

STADION TACTICAL DEF

STADION Performance

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

Barings Global Short

Barings Performance

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Over the last 90 days Barings Global Short has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Barings Global is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with STADION TACTICAL and Barings Global

The main advantage of trading using opposite STADION TACTICAL and Barings Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STADION TACTICAL 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 STADION TACTICAL DEFENSIVE and Barings Global Short 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.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.