Correlation Between CAVA Group, and Barings BDC

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Can any of the company-specific risk be diversified away by investing in both CAVA Group, and Barings BDC 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 CAVA Group, and Barings BDC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAVA Group, and Barings BDC, you can compare the effects of market volatilities on CAVA Group, and Barings BDC 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 CAVA Group, with a short position of Barings BDC. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAVA Group, and Barings BDC.

Diversification Opportunities for CAVA Group, and Barings BDC

0.39
  Correlation Coefficient

Weak diversification

The 3 months correlation between CAVA and Barings is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding CAVA Group, and Barings BDC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings BDC and CAVA Group, 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 CAVA Group, are associated (or correlated) with Barings BDC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings BDC has no effect on the direction of CAVA Group, i.e., CAVA Group, and Barings BDC go up and down completely randomly.

Pair Corralation between CAVA Group, and Barings BDC

Given the investment horizon of 90 days CAVA Group, is expected to under-perform the Barings BDC. In addition to that, CAVA Group, is 3.81 times more volatile than Barings BDC. It trades about -0.18 of its total potential returns per unit of risk. Barings BDC is currently generating about 0.18 per unit of volatility. If you would invest  951.00  in Barings BDC on September 12, 2024 and sell it today you would earn a total of  33.00  from holding Barings BDC or generate 3.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

CAVA Group,  vs.  Barings BDC

 Performance 
       Timeline  
CAVA Group, 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in CAVA Group, are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CAVA Group, is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Barings BDC 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Barings BDC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Barings BDC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

CAVA Group, and Barings BDC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CAVA Group, and Barings BDC

The main advantage of trading using opposite CAVA Group, and Barings BDC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAVA Group, position performs unexpectedly, Barings BDC 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 Barings BDC will offset losses from the drop in Barings BDC's long position.
The idea behind CAVA Group, and Barings BDC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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