Correlation Between Barings BDC and Univest Pennsylvania

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

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

Diversification Opportunities for Barings BDC and Univest Pennsylvania

0.61

Correlation Coefficient

Barings BDC  Univest Pennsylvania

Poor diversification

The 3 months correlation between Barings and Univest is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Barings BDC and Univest Pennsylvania in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Univest Pennsylvania 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 Univest Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Univest Pennsylvania has no effect on the direction of Barings BDC i.e., Barings BDC and Univest Pennsylvania go up and down completely randomly.

Pair Corralation between Barings BDC and Univest Pennsylvania

Given the investment horizon of 90 days Barings BDC is expected to generate 0.67 times more return on investment than Univest Pennsylvania. However, Barings BDC is 1.49 times less risky than Univest Pennsylvania. It trades about 0.07 of its potential returns per unit of risk. Univest Pennsylvania is currently generating about -0.02 per unit of risk. If you would invest  924.00  in Barings BDC on December 30, 2024 and sell it today you would earn a total of  37.00  from holding Barings BDC or generate 4.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Barings BDC  vs.  Univest Pennsylvania

Barings BDC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Barings BDC are ranked lower than 5 (%) 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.

Univest Pennsylvania

Risk-Adjusted Performance

Very Weak

Over the last 90 days Univest Pennsylvania has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Univest Pennsylvania is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Barings BDC and Univest Pennsylvania

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

The idea behind Barings BDC and Univest Pennsylvania 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.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.