Correlation Between Carlyle and Barings BDC
Can any of the company-specific risk be diversified away by investing in both Carlyle 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 Carlyle and Barings BDC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carlyle Group and Barings BDC, you can compare the effects of market volatilities on Carlyle 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 Carlyle with a short position of Barings BDC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlyle and Barings BDC.
Diversification Opportunities for Carlyle and Barings BDC
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Carlyle and Barings is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group and Barings BDC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings BDC and Carlyle 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 Carlyle 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 Carlyle i.e., Carlyle and Barings BDC go up and down completely randomly.
Pair Corralation between Carlyle and Barings BDC
Allowing for the 90-day total investment horizon Carlyle Group is expected to generate 2.1 times more return on investment than Barings BDC. However, Carlyle is 2.1 times more volatile than Barings BDC. It trades about 0.28 of its potential returns per unit of risk. Barings BDC is currently generating about 0.25 per unit of risk. If you would invest 5,198 in Carlyle Group on October 26, 2024 and sell it today you would earn a total of 521.50 from holding Carlyle Group or generate 10.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Carlyle Group vs. Barings BDC
Performance |
| Timeline |
| Carlyle Group |
| Barings BDC |
Carlyle and Barings BDC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carlyle and Barings BDC
The main advantage of trading using opposite Carlyle and Barings BDC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlyle 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 Carlyle 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.| Barings BDC vs. KKR Co LP | Barings BDC vs. Carlyle Group | Barings BDC vs. Blue Owl Capital | Barings BDC vs. TPG Inc |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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