Correlation Between Barings BDC and Emerson Radio
Can any of the company-specific risk be diversified away by investing in both Barings BDC and Emerson Radio 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 Emerson Radio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings BDC and Emerson Radio, you can compare the effects of market volatilities on Barings BDC and Emerson Radio 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 Emerson Radio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings BDC and Emerson Radio.
Diversification Opportunities for Barings BDC and Emerson Radio
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Barings and Emerson is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Barings BDC and Emerson Radio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Radio 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 Emerson Radio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Radio has no effect on the direction of Barings BDC i.e., Barings BDC and Emerson Radio go up and down completely randomly.
Pair Corralation between Barings BDC and Emerson Radio
Given the investment horizon of 90 days Barings BDC is expected to generate 0.34 times more return on investment than Emerson Radio. However, Barings BDC is 2.92 times less risky than Emerson Radio. It trades about 0.29 of its potential returns per unit of risk. Emerson Radio is currently generating about -0.27 per unit of risk. If you would invest 959.00 in Barings BDC on September 2, 2024 and sell it today you would earn a total of 65.00 from holding Barings BDC or generate 6.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings BDC vs. Emerson Radio
Performance |
| Timeline |
| Barings BDC |
| Emerson Radio |
Barings BDC and Emerson Radio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings BDC and Emerson Radio
The main advantage of trading using opposite Barings BDC and Emerson Radio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings BDC position performs unexpectedly, Emerson Radio 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 Emerson Radio will offset losses from the drop in Emerson Radio's long position.| Barings BDC vs. Visa Class A | Barings BDC vs. Diamond Hill Investment | Barings BDC vs. Distoken Acquisition | Barings BDC vs. Associated Capital Group |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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