Correlation Between GameStop Corp and Barings BDC

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

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

Diversification Opportunities for GameStop Corp and Barings BDC

-0.77

Correlation Coefficient

GameStop Corp  Barings BDC

Pay attention - limited upside

The 3 months correlation between GameStop and Barings is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and Barings BDC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings BDC and GameStop Corp 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 GameStop Corp are associated (or correlated) with Barings BDC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings BDC has no effect on the direction of GameStop Corp i.e., GameStop Corp and Barings BDC go up and down completely randomly.

Pair Corralation between GameStop Corp and Barings BDC

Considering the 90-day investment horizon GameStop Corp is expected to generate 9.15 times more return on investment than Barings BDC. However, GameStop Corp is 9.15 times more volatile than Barings BDC. It trades about 0.08 of its potential returns per unit of risk. Barings BDC is currently generating about 0.08 per unit of risk. If you would invest  1,101  in GameStop Corp on December 5, 2024 and sell it today you would earn a total of  1,362  from holding GameStop Corp or generate 123.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.56%
Values	Daily Returns

GameStop Corp  vs.  Barings BDC

GameStop Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days GameStop Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Barings BDC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Barings BDC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Barings BDC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with GameStop Corp and Barings BDC

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

The idea behind GameStop Corp and Barings BDC 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.