Correlation Between Barings BDC and Omni Health

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

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

Diversification Opportunities for Barings BDC and Omni Health

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Correlation Coefficient

Barings BDC  Omni Health

Pay attention - limited upside

The 3 months correlation between Barings and Omni is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Barings BDC and Omni Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omni Health 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 Omni Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omni Health has no effect on the direction of Barings BDC i.e., Barings BDC and Omni Health go up and down completely randomly.

Pair Corralation between Barings BDC and Omni Health

Given the investment horizon of 90 days Barings BDC is expected to under-perform the Omni Health. But the stock apears to be less risky and, when comparing its historical volatility, Barings BDC is 147.38 times less risky than Omni Health. The stock trades about -0.03 of its potential returns per unit of risk. The Omni Health is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Omni Health on September 19, 2024 and sell it today you would earn a total of  0.00  from holding Omni Health or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

Barings BDC  vs.  Omni Health

Barings BDC

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Barings BDC has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Omni Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Omni Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Omni Health is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Barings BDC and Omni Health

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

The idea behind Barings BDC and Omni Health 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.