Correlation Between Barings BDC and WPP PLC
Can any of the company-specific risk be diversified away by investing in both Barings BDC and WPP 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 WPP 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 WPP PLC ADR, you can compare the effects of market volatilities on Barings BDC and WPP 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 WPP PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings BDC and WPP PLC.
Diversification Opportunities for Barings BDC and WPP PLC
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barings and WPP is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Barings BDC and WPP PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPP PLC ADR 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 WPP PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPP PLC ADR has no effect on the direction of Barings BDC i.e., Barings BDC and WPP PLC go up and down completely randomly.
Pair Corralation between Barings BDC and WPP PLC
Given the investment horizon of 90 days Barings BDC is expected to generate 0.72 times more return on investment than WPP PLC. However, Barings BDC is 1.39 times less risky than WPP PLC. It trades about 0.1 of its potential returns per unit of risk. WPP PLC ADR is currently generating about 0.0 per unit of risk. If you would invest 625.00 in Barings BDC on November 27, 2024 and sell it today you would earn a total of 418.00 from holding Barings BDC or generate 66.88% 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. WPP PLC ADR
Performance |
| Timeline |
| Barings BDC |
| WPP PLC ADR |
Barings BDC and WPP PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings BDC and WPP PLC
The main advantage of trading using opposite Barings BDC and WPP PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings BDC position performs unexpectedly, WPP 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 WPP PLC will offset losses from the drop in WPP PLC'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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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