Correlation Between Barings BDC and Runway Growth
Can any of the company-specific risk be diversified away by investing in both Barings BDC and Runway Growth 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 Runway Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings BDC and Runway Growth Finance, you can compare the effects of market volatilities on Barings BDC and Runway Growth 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 Runway Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings BDC and Runway Growth.
Diversification Opportunities for Barings BDC and Runway Growth
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Barings and Runway is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Barings BDC and Runway Growth Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Runway Growth Finance 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 Runway Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Runway Growth Finance has no effect on the direction of Barings BDC i.e., Barings BDC and Runway Growth go up and down completely randomly.
Pair Corralation between Barings BDC and Runway Growth
Given the investment horizon of 90 days Barings BDC is expected to generate 1.34 times less return on investment than Runway Growth. But when comparing it to its historical volatility, Barings BDC is 1.06 times less risky than Runway Growth. It trades about 0.17 of its potential returns per unit of risk. Runway Growth Finance is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,110 in Runway Growth Finance on November 2, 2024 and sell it today you would earn a total of 42.00 from holding Runway Growth Finance or generate 3.78% 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. Runway Growth Finance
Performance |
| Timeline |
| Barings BDC |
| Runway Growth Finance |
Barings BDC and Runway Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings BDC and Runway Growth
The main advantage of trading using opposite Barings BDC and Runway Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings BDC position performs unexpectedly, Runway Growth 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 Runway Growth will offset losses from the drop in Runway Growth'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 |
| Runway Growth vs. Barings BDC | Runway Growth vs. OneMain Holdings | Runway Growth vs. Navient Corp | Runway Growth vs. Federal Agricultural Mortgage |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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