Correlation Between Barings BDC and Stingray

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

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

Diversification Opportunities for Barings BDC and Stingray

0.69

Correlation Coefficient

Barings BDC  Stingray

Poor diversification

The 3 months correlation between Barings and Stingray is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Barings BDC and Stingray Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stingray Group 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 Stingray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stingray Group has no effect on the direction of Barings BDC i.e., Barings BDC and Stingray go up and down completely randomly.

Pair Corralation between Barings BDC and Stingray

Given the investment horizon of 90 days Barings BDC is expected to generate 4.99 times less return on investment than Stingray. But when comparing it to its historical volatility, Barings BDC is 2.36 times less risky than Stingray. It trades about 0.04 of its potential returns per unit of risk. Stingray Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  561.00  in Stingray Group on November 28, 2024 and sell it today you would earn a total of  73.00  from holding Stingray Group or generate 13.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	92.06%
Values	Daily Returns

Barings BDC  vs.  Stingray Group

Barings BDC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Barings BDC are ranked lower than 3 (%) 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.

Stingray Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stingray Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Stingray reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Barings BDC and Stingray

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

The idea behind Barings BDC and Stingray 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..