Correlation Between Vanguard Small and Barings BDC
Can any of the company-specific risk be diversified away by investing in both Vanguard Small 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 Vanguard Small and Barings BDC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Index and Barings BDC, you can compare the effects of market volatilities on Vanguard Small 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 Vanguard Small with a short position of Barings BDC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small and Barings BDC.
Diversification Opportunities for Vanguard Small and Barings BDC
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vanguard and Barings is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and Barings BDC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings BDC and Vanguard Small 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 Vanguard Small Cap Index 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 Vanguard Small i.e., Vanguard Small and Barings BDC go up and down completely randomly.
Pair Corralation between Vanguard Small and Barings BDC
Assuming the 90 days horizon Vanguard Small is expected to generate 1.06 times less return on investment than Barings BDC. But when comparing it to its historical volatility, Vanguard Small Cap Index is 1.05 times less risky than Barings BDC. It trades about 0.07 of its potential returns per unit of risk. Barings BDC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 709.00 in Barings BDC on September 2, 2024 and sell it today you would earn a total of 315.00 from holding Barings BDC or generate 44.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Index vs. Barings BDC
Performance |
| Timeline |
| Vanguard Small Cap |
| Barings BDC |
Vanguard Small and Barings BDC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small and Barings BDC
The main advantage of trading using opposite Vanguard Small and Barings BDC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small 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.| Vanguard Small vs. Vanguard Strategic Small Cap | Vanguard Small vs. Vanguard Emerging Markets | Vanguard Small vs. Vanguard Diversified Equity | Vanguard Small vs. Vanguard Mid Cap |
| 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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