Correlation Between FirstCash and Barings Corporate

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

By analyzing existing cross correlation between FirstCash and Barings Corporate Investors, you can compare the effects of market volatilities on FirstCash and Barings Corporate 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 FirstCash with a short position of Barings Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of FirstCash and Barings Corporate.

Diversification Opportunities for FirstCash and Barings Corporate

-0.34

Correlation Coefficient

FirstCash  Barings Corporate

Very good diversification

The 3 months correlation between FirstCash and Barings is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding FirstCash and Barings Corporate Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Corporate and FirstCash 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 FirstCash are associated (or correlated) with Barings Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Corporate has no effect on the direction of FirstCash i.e., FirstCash and Barings Corporate go up and down completely randomly.

Pair Corralation between FirstCash and Barings Corporate

Given the investment horizon of 90 days FirstCash is expected to generate 2.21 times less return on investment than Barings Corporate. But when comparing it to its historical volatility, FirstCash is 1.04 times less risky than Barings Corporate. It trades about 0.03 of its potential returns per unit of risk. Barings Corporate Investors is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,178  in Barings Corporate Investors on October 9, 2024 and sell it today you would earn a total of  830.00  from holding Barings Corporate Investors or generate 70.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

FirstCash  vs.  Barings Corporate Investors

FirstCash

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FirstCash has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Barings Corporate

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Barings Corporate Investors are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Barings Corporate may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with FirstCash and Barings Corporate

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

The idea behind FirstCash and Barings Corporate Investors 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.