Correlation Between Barings BDC and Stepan
Can any of the company-specific risk be diversified away by investing in both Barings BDC and Stepan 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 Stepan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings BDC and Stepan Company, you can compare the effects of market volatilities on Barings BDC and Stepan 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 Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings BDC and Stepan.
Diversification Opportunities for Barings BDC and Stepan
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Barings and Stepan is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Barings BDC and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company 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 Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Barings BDC i.e., Barings BDC and Stepan go up and down completely randomly.
Pair Corralation between Barings BDC and Stepan
Given the investment horizon of 90 days Barings BDC is expected to generate 0.62 times more return on investment than Stepan. However, Barings BDC is 1.62 times less risky than Stepan. It trades about 0.09 of its potential returns per unit of risk. Stepan Company is currently generating about -0.02 per unit of risk. If you would invest 807.00 in Barings BDC on September 4, 2024 and sell it today you would earn a total of 215.00 from holding Barings BDC or generate 26.64% 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. Stepan Company
Performance |
| Timeline |
| Barings BDC |
| Stepan Company |
Barings BDC and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings BDC and Stepan
The main advantage of trading using opposite Barings BDC and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings BDC position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan'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 |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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