Correlation Between Barings BDC and NiSource

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

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

Diversification Opportunities for Barings BDC and NiSource

0.71

Correlation Coefficient

Barings BDC  NiSource

Poor diversification

The 3 months correlation between Barings and NiSource is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Barings BDC and NiSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiSource 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 NiSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NiSource has no effect on the direction of Barings BDC i.e., Barings BDC and NiSource go up and down completely randomly.

Pair Corralation between Barings BDC and NiSource

Given the investment horizon of 90 days Barings BDC is expected to under-perform the NiSource. In addition to that, Barings BDC is 1.07 times more volatile than NiSource. It trades about -0.27 of its total potential returns per unit of risk. NiSource is currently generating about -0.22 per unit of volatility. If you would invest  3,795  in NiSource on September 26, 2024 and sell it today you would lose (151.00) from holding NiSource or give up 3.98% of portfolio value over 90 days.

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

Barings BDC  vs.  NiSource

Barings BDC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barings BDC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Barings BDC is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

NiSource

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Barings BDC and NiSource

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

The idea behind Barings BDC and NiSource 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.