Correlation Between Barings BDC and Noble Plc
Can any of the company-specific risk be diversified away by investing in both Barings BDC and Noble Plc 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 Noble Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings BDC and Noble plc, you can compare the effects of market volatilities on Barings BDC and Noble Plc 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 Noble Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings BDC and Noble Plc.
Diversification Opportunities for Barings BDC and Noble Plc
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barings and Noble is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Barings BDC and Noble plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noble plc 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 Noble Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noble plc has no effect on the direction of Barings BDC i.e., Barings BDC and Noble Plc go up and down completely randomly.
Pair Corralation between Barings BDC and Noble Plc
Given the investment horizon of 90 days Barings BDC is expected to generate 0.56 times more return on investment than Noble Plc. However, Barings BDC is 1.8 times less risky than Noble Plc. It trades about 0.1 of its potential returns per unit of risk. Noble plc is currently generating about -0.04 per unit of risk. If you would invest 675.00 in Barings BDC on September 12, 2024 and sell it today you would earn a total of 309.00 from holding Barings BDC or generate 45.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings BDC vs. Noble plc
Performance |
| Timeline |
| Barings BDC |
| Noble plc |
Barings BDC and Noble Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings BDC and Noble Plc
The main advantage of trading using opposite Barings BDC and Noble Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings BDC position performs unexpectedly, Noble Plc 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 Noble Plc will offset losses from the drop in Noble Plc's long position.| Barings BDC vs. Victory Integrity Smallmid Cap | Barings BDC vs. Hilton Worldwide Holdings | Barings BDC vs. NVIDIA | Barings BDC vs. JPMorgan Chase Co |
| Noble Plc vs. Nabors Industries | Noble Plc vs. Borr Drilling | Noble Plc vs. Transocean | Noble Plc vs. Helmerich and Payne |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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