Correlation Between Barings BDC and Mastercard
Can any of the company-specific risk be diversified away by investing in both Barings BDC and Mastercard 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 Mastercard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings BDC and Mastercard, you can compare the effects of market volatilities on Barings BDC and Mastercard 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 Mastercard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings BDC and Mastercard.
Diversification Opportunities for Barings BDC and Mastercard
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Barings and Mastercard is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Barings BDC and Mastercard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastercard 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 Mastercard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mastercard has no effect on the direction of Barings BDC i.e., Barings BDC and Mastercard go up and down completely randomly.
Pair Corralation between Barings BDC and Mastercard
Given the investment horizon of 90 days Barings BDC is expected to under-perform the Mastercard. In addition to that, Barings BDC is 1.13 times more volatile than Mastercard. It trades about -0.27 of its total potential returns per unit of risk. Mastercard is currently generating about 0.03 per unit of volatility. If you would invest 52,660 in Mastercard on September 24, 2024 and sell it today you would earn a total of 236.00 from holding Mastercard or generate 0.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Barings BDC vs. Mastercard
Performance |
Timeline |
Barings BDC |
Mastercard |
Barings BDC and Mastercard Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Barings BDC and Mastercard
The main advantage of trading using opposite Barings BDC and Mastercard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings BDC position performs unexpectedly, Mastercard 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 Mastercard will offset losses from the drop in Mastercard's long position.Barings BDC vs. Aquagold International | Barings BDC vs. Morningstar Unconstrained Allocation | Barings BDC vs. Thrivent High Yield | Barings BDC vs. Via Renewables |
Mastercard vs. American Express | Mastercard vs. Upstart Holdings | Mastercard vs. Capital One Financial | Mastercard vs. Ally Financial |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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