Correlation Between Barings BDC and FactSet Research
Can any of the company-specific risk be diversified away by investing in both Barings BDC and FactSet Research 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 FactSet Research into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings BDC and FactSet Research Systems, you can compare the effects of market volatilities on Barings BDC and FactSet Research 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 FactSet Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings BDC and FactSet Research.
Diversification Opportunities for Barings BDC and FactSet Research
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Barings and FactSet is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Barings BDC and FactSet Research Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FactSet Research Systems 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 FactSet Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FactSet Research Systems has no effect on the direction of Barings BDC i.e., Barings BDC and FactSet Research go up and down completely randomly.
Pair Corralation between Barings BDC and FactSet Research
Given the investment horizon of 90 days Barings BDC is expected to generate 0.89 times more return on investment than FactSet Research. However, Barings BDC is 1.12 times less risky than FactSet Research. It trades about 0.08 of its potential returns per unit of risk. FactSet Research Systems is currently generating about 0.04 per unit of risk. If you would invest 798.00 in Barings BDC on August 29, 2024 and sell it today you would earn a total of 227.00 from holding Barings BDC or generate 28.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings BDC vs. FactSet Research Systems
Performance |
| Timeline |
| Barings BDC |
| FactSet Research Systems |
Barings BDC and FactSet Research Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings BDC and FactSet Research
The main advantage of trading using opposite Barings BDC and FactSet Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings BDC position performs unexpectedly, FactSet Research 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 FactSet Research will offset losses from the drop in FactSet Research's long position.The idea behind Barings BDC and FactSet Research Systems 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.| FactSet Research vs. Dun Bradstreet Holdings | FactSet Research vs. Moodys | FactSet Research vs. MSCI Inc | FactSet Research vs. Intercontinental Exchange |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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