Correlation Between Longleaf Partners and Barings Global

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

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

Diversification Opportunities for Longleaf Partners and Barings Global

0.86

Correlation Coefficient

Longleaf Partners  Barings Global

Very poor diversification

The 3 months correlation between Longleaf and Barings is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Longleaf Partners Fund and Barings Global Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Global Floating and Longleaf Partners 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 Longleaf Partners Fund 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 Floating has no effect on the direction of Longleaf Partners i.e., Longleaf Partners and Barings Global go up and down completely randomly.

Pair Corralation between Longleaf Partners and Barings Global

Assuming the 90 days horizon Longleaf Partners Fund is expected to generate 5.55 times more return on investment than Barings Global. However, Longleaf Partners is 5.55 times more volatile than Barings Global Floating. It trades about 0.07 of its potential returns per unit of risk. Barings Global Floating is currently generating about 0.22 per unit of risk. If you would invest  1,872  in Longleaf Partners Fund on August 31, 2024 and sell it today you would earn a total of  691.00  from holding Longleaf Partners Fund or generate 36.91% return on investment over 90 days.

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

Longleaf Partners Fund  vs.  Barings Global Floating

Longleaf Partners

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Longleaf Partners Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Longleaf Partners may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Barings Global Floating

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Barings Global Floating are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental 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 Longleaf Partners and Barings Global

The main advantage of trading using opposite Longleaf Partners and Barings Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longleaf Partners 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 Longleaf Partners Fund and Barings Global Floating 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.