Correlation Between Barings BDC and Everus Construction

Can any of the company-specific risk be diversified away by investing in both Barings BDC and Everus Construction 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 Everus Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Barings BDC and Everus Construction Group, you can compare the effects of market volatilities on Barings BDC and Everus Construction 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 Everus Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings BDC and Everus Construction.

Diversification Opportunities for Barings BDC and Everus Construction

-0.14

Correlation Coefficient

Barings BDC  Everus Construction

Good diversification

The 3 months correlation between Barings and Everus is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Barings BDC and Everus Construction Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everus Construction 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 Everus Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everus Construction has no effect on the direction of Barings BDC i.e., Barings BDC and Everus Construction go up and down completely randomly.

Pair Corralation between Barings BDC and Everus Construction

Given the investment horizon of 90 days Barings BDC is expected to generate 0.21 times more return on investment than Everus Construction. However, Barings BDC is 4.67 times less risky than Everus Construction. It trades about 0.08 of its potential returns per unit of risk. Everus Construction Group is currently generating about -0.19 per unit of risk. If you would invest  922.00  in Barings BDC on December 25, 2024 and sell it today you would earn a total of  42.50  from holding Barings BDC or generate 4.61% 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.  Everus Construction Group

Barings BDC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Barings BDC are ranked lower than 6 (%) 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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Everus Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days Everus Construction Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Barings BDC and Everus Construction

The main advantage of trading using opposite Barings BDC and Everus Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings BDC position performs unexpectedly, Everus Construction 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 Everus Construction will offset losses from the drop in Everus Construction's long position.

The idea behind Barings BDC and Everus Construction Group 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.