Correlation Between Kenvue and Barings BDC

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

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

Diversification Opportunities for Kenvue and Barings BDC

0.24

Correlation Coefficient

Kenvue  Barings BDC

Modest diversification

The 3 months correlation between Kenvue and Barings is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Kenvue Inc and Barings BDC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings BDC and Kenvue 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 Kenvue Inc 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 Kenvue i.e., Kenvue and Barings BDC go up and down completely randomly.

Pair Corralation between Kenvue and Barings BDC

Given the investment horizon of 90 days Kenvue Inc is expected to generate 1.38 times more return on investment than Barings BDC. However, Kenvue is 1.38 times more volatile than Barings BDC. It trades about 0.14 of its potential returns per unit of risk. Barings BDC is currently generating about 0.07 per unit of risk. If you would invest  2,097  in Kenvue Inc on December 29, 2024 and sell it today you would earn a total of  253.00  from holding Kenvue Inc or generate 12.06% return on investment over 90 days.

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

Kenvue Inc  vs.  Barings BDC

Kenvue Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kenvue Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Kenvue may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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.

Pair Trading with Kenvue and Barings BDC

The main advantage of trading using opposite Kenvue and Barings BDC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kenvue 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 Kenvue Inc 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.

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 Anywhere module to track or share privately all of your investments from the convenience of any device.