Correlation Between Barings Emerging and Guggenheim Floating

Can any of the company-specific risk be diversified away by investing in both Barings Emerging and Guggenheim Floating 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 Guggenheim Floating 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 Guggenheim Floating Rate, you can compare the effects of market volatilities on Barings Emerging and Guggenheim Floating 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 Guggenheim Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and Guggenheim Floating.

Diversification Opportunities for Barings Emerging and Guggenheim Floating

-0.52

Correlation Coefficient

Barings Emerging  Guggenheim Floating

Excellent diversification

The 3 months correlation between Barings and Guggenheim is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets and Guggenheim Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Floating Rate 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 Guggenheim Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Floating Rate has no effect on the direction of Barings Emerging i.e., Barings Emerging and Guggenheim Floating go up and down completely randomly.

Pair Corralation between Barings Emerging and Guggenheim Floating

Assuming the 90 days horizon Barings Emerging Markets is expected to under-perform the Guggenheim Floating. In addition to that, Barings Emerging is 1.63 times more volatile than Guggenheim Floating Rate. It trades about -0.02 of its total potential returns per unit of risk. Guggenheim Floating Rate is currently generating about 0.2 per unit of volatility. If you would invest  2,376  in Guggenheim Floating Rate on September 13, 2024 and sell it today you would earn a total of  56.00  from holding Guggenheim Floating Rate or generate 2.36% return on investment over 90 days.

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

Barings Emerging Markets  vs.  Guggenheim Floating Rate

Barings Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barings Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. 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.

Guggenheim Floating Rate

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Floating Rate are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Guggenheim Floating 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 Guggenheim Floating

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

The idea behind Barings Emerging Markets and Guggenheim Floating Rate 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.