Correlation Between Barings BDC and SLM Corp
Can any of the company-specific risk be diversified away by investing in both Barings BDC and SLM Corp 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 SLM Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings BDC and SLM Corp, you can compare the effects of market volatilities on Barings BDC and SLM Corp 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 SLM Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings BDC and SLM Corp.
Diversification Opportunities for Barings BDC and SLM Corp
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barings and SLM is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Barings BDC and SLM Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLM Corp 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 SLM Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLM Corp has no effect on the direction of Barings BDC i.e., Barings BDC and SLM Corp go up and down completely randomly.
Pair Corralation between Barings BDC and SLM Corp
Given the investment horizon of 90 days Barings BDC is expected to generate 4.26 times less return on investment than SLM Corp. But when comparing it to its historical volatility, Barings BDC is 3.16 times less risky than SLM Corp. It trades about 0.2 of its potential returns per unit of risk. SLM Corp is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2,216 in SLM Corp on August 30, 2024 and sell it today you would earn a total of 504.00 from holding SLM Corp or generate 22.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings BDC vs. SLM Corp
Performance |
| Timeline |
| Barings BDC |
| SLM Corp |
Barings BDC and SLM Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings BDC and SLM Corp
The main advantage of trading using opposite Barings BDC and SLM Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings BDC position performs unexpectedly, SLM Corp 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 SLM Corp will offset losses from the drop in SLM Corp'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 |
| SLM Corp vs. Orix Corp Ads | SLM Corp vs. FirstCash | SLM Corp vs. Medallion Financial Corp | SLM Corp vs. Oportun Financial Corp |
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 CEOs Directory module to screen CEOs from public companies around the world.
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