Correlation Between Barings Active and Franklin Biotechnology
Can any of the company-specific risk be diversified away by investing in both Barings Active and Franklin Biotechnology 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 Active and Franklin Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings Active Short and Franklin Biotechnology Discovery, you can compare the effects of market volatilities on Barings Active and Franklin Biotechnology 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 Active with a short position of Franklin Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Franklin Biotechnology.
Diversification Opportunities for Barings Active and Franklin Biotechnology
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barings and Franklin is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Franklin Biotechnology Discove in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Biotechnology and Barings Active 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 Active Short are associated (or correlated) with Franklin Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Biotechnology has no effect on the direction of Barings Active i.e., Barings Active and Franklin Biotechnology go up and down completely randomly.
Pair Corralation between Barings Active and Franklin Biotechnology
Assuming the 90 days horizon Barings Active Short is expected to generate 0.09 times more return on investment than Franklin Biotechnology. However, Barings Active Short is 10.7 times less risky than Franklin Biotechnology. It trades about 0.1 of its potential returns per unit of risk. Franklin Biotechnology Discovery is currently generating about -0.04 per unit of risk. If you would invest 919.00 in Barings Active Short on September 12, 2024 and sell it today you would earn a total of 7.00 from holding Barings Active Short or generate 0.76% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Barings Active Short vs. Franklin Biotechnology Discove
Performance |
Timeline |
Barings Active Short |
Franklin Biotechnology |
Barings Active and Franklin Biotechnology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Barings Active and Franklin Biotechnology
The main advantage of trading using opposite Barings Active and Franklin Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active position performs unexpectedly, Franklin Biotechnology 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 Franklin Biotechnology will offset losses from the drop in Franklin Biotechnology's long position.Barings Active vs. SCOR PK | Barings Active vs. Morningstar Unconstrained Allocation | Barings Active vs. Via Renewables | Barings Active vs. Bondbloxx ETF Trust |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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