Correlation Between Barings BDC and High Performance

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

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

Diversification Opportunities for Barings BDC and High Performance

0.0

Correlation Coefficient

Barings BDC  High Performance

Pay attention - limited upside

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

Pair Corralation between Barings BDC and High Performance

Given the investment horizon of 90 days Barings BDC is expected to generate 1554.6 times less return on investment than High Performance. But when comparing it to its historical volatility, Barings BDC is 295.76 times less risky than High Performance. It trades about 0.06 of its potential returns per unit of risk. High Performance Beverages is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  0.01  in High Performance Beverages on October 25, 2024 and sell it today you would lose (0.01) from holding High Performance Beverages or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Barings BDC  vs.  High Performance Beverages

Barings BDC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Barings BDC are ranked lower than 4 (%) 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.

High Performance Bev

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days High Performance Beverages has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, High Performance is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Barings BDC and High Performance

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

The idea behind Barings BDC and High Performance Beverages 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .