Correlation Between Barings BDC and NYSE Composite
Can any of the company-specific risk be diversified away by investing in both Barings BDC and NYSE Composite 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 NYSE Composite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings BDC and NYSE Composite, you can compare the effects of market volatilities on Barings BDC and NYSE Composite 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 NYSE Composite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings BDC and NYSE Composite.
Diversification Opportunities for Barings BDC and NYSE Composite
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Barings and NYSE is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Barings BDC and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite 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 NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of Barings BDC i.e., Barings BDC and NYSE Composite go up and down completely randomly.
Pair Corralation between Barings BDC and NYSE Composite
Given the investment horizon of 90 days Barings BDC is expected to generate 1.04 times more return on investment than NYSE Composite. However, Barings BDC is 1.04 times more volatile than NYSE Composite. It trades about 0.51 of its potential returns per unit of risk. NYSE Composite is currently generating about 0.15 per unit of risk. If you would invest 987.00 in Barings BDC on November 22, 2024 and sell it today you would earn a total of 59.00 from holding Barings BDC or generate 5.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings BDC vs. NYSE Composite
Performance |
| Timeline |
Barings BDC and NYSE Composite Volatility Contrast
Predicted Return Density |
| Returns |
Barings BDC
Pair trading matchups for Barings BDC
NYSE Composite
Pair trading matchups for NYSE Composite
Pair Trading with Barings BDC and NYSE Composite
The main advantage of trading using opposite Barings BDC and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings BDC position performs unexpectedly, NYSE Composite 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 NYSE Composite will offset losses from the drop in NYSE Composite'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 |
| NYSE Composite vs. Hillman Solutions Corp | NYSE Composite vs. Genuine Parts Co | NYSE Composite vs. Newell Brands | NYSE Composite vs. Acme United |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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