Correlation Between Barings BDC and RALPH

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

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

Diversification Opportunities for Barings BDC and RALPH

-0.68

Correlation Coefficient

Barings BDC  RALPH

Excellent diversification

The 3 months correlation between Barings and RALPH is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Barings BDC and RALPH LAUREN P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RALPH LAUREN P 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 RALPH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RALPH LAUREN P has no effect on the direction of Barings BDC i.e., Barings BDC and RALPH go up and down completely randomly.

Pair Corralation between Barings BDC and RALPH

Given the investment horizon of 90 days Barings BDC is expected to generate 3.56 times more return on investment than RALPH. However, Barings BDC is 3.56 times more volatile than RALPH LAUREN P. It trades about 0.08 of its potential returns per unit of risk. RALPH LAUREN P is currently generating about -0.06 per unit of risk. If you would invest  979.00  in Barings BDC on September 4, 2024 and sell it today you would earn a total of  43.00  from holding Barings BDC or generate 4.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

Barings BDC  vs.  RALPH LAUREN P

Barings BDC

Risk-Adjusted Performance

6 of 100

OK

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.

RALPH LAUREN P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RALPH LAUREN P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, RALPH is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Barings BDC and RALPH

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

The idea behind Barings BDC and RALPH LAUREN P 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.