Correlation Between Barings BDC and EZCORP
Can any of the company-specific risk be diversified away by investing in both Barings BDC and EZCORP 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 BDC and EZCORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings BDC and EZCORP Inc, you can compare the effects of market volatilities on Barings BDC and EZCORP 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 BDC with a short position of EZCORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings BDC and EZCORP.
Diversification Opportunities for Barings BDC and EZCORP
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Barings and EZCORP is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Barings BDC and EZCORP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EZCORP Inc and Barings BDC 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 BDC are associated (or correlated) with EZCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EZCORP Inc has no effect on the direction of Barings BDC i.e., Barings BDC and EZCORP go up and down completely randomly.
Pair Corralation between Barings BDC and EZCORP
Given the investment horizon of 90 days Barings BDC is expected to generate 1.47 times less return on investment than EZCORP. But when comparing it to its historical volatility, Barings BDC is 1.08 times less risky than EZCORP. It trades about 0.2 of its potential returns per unit of risk. EZCORP Inc is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,175 in EZCORP Inc on August 30, 2024 and sell it today you would earn a total of 90.00 from holding EZCORP Inc or generate 7.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings BDC vs. EZCORP Inc
Performance |
| Timeline |
| Barings BDC |
| EZCORP Inc |
Barings BDC and EZCORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings BDC and EZCORP
The main advantage of trading using opposite Barings BDC and EZCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings BDC position performs unexpectedly, EZCORP 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 EZCORP will offset losses from the drop in EZCORP's long position.| Barings BDC vs. Runway Growth Finance | Barings BDC vs. OneMain Holdings | Barings BDC vs. Navient Corp | Barings BDC vs. Oaktree Specialty Lending |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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