Correlation Between Capital One and Barings BDC
Can any of the company-specific risk be diversified away by investing in both Capital One 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 Capital One and Barings BDC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital One Financial and Barings BDC, you can compare the effects of market volatilities on Capital One 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 Capital One with a short position of Barings BDC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and Barings BDC.
Diversification Opportunities for Capital One and Barings BDC
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Capital and Barings is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and Barings BDC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings BDC and Capital One 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 Capital One Financial 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 Capital One i.e., Capital One and Barings BDC go up and down completely randomly.
Pair Corralation between Capital One and Barings BDC
Considering the 90-day investment horizon Capital One Financial is expected to generate 2.14 times more return on investment than Barings BDC. However, Capital One is 2.14 times more volatile than Barings BDC. It trades about 0.13 of its potential returns per unit of risk. Barings BDC is currently generating about 0.05 per unit of risk. If you would invest 13,607 in Capital One Financial on September 1, 2024 and sell it today you would earn a total of 5,594 from holding Capital One Financial or generate 41.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital One Financial vs. Barings BDC
Performance |
| Timeline |
| Capital One Financial |
| Barings BDC |
Capital One and Barings BDC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital One and Barings BDC
The main advantage of trading using opposite Capital One and Barings BDC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One 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.| Capital One vs. Mastercard | Capital One vs. Visa Class A | Capital One vs. PayPal Holdings | Capital One vs. Ally Financial |
| Barings BDC vs. Visa Class A | Barings BDC vs. Diamond Hill Investment | Barings BDC vs. Distoken Acquisition | Barings BDC vs. Associated Capital Group |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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