Correlation Between Bain Capital and Cion Investment

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

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

Diversification Opportunities for Bain Capital and Cion Investment

0.01

Correlation Coefficient

Bain Capital  Cion Investment

Significant diversification

The 3 months correlation between Bain and Cion is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Bain Capital Specialty and Cion Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cion Investment Corp and Bain Capital 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 Bain Capital Specialty are associated (or correlated) with Cion Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cion Investment Corp has no effect on the direction of Bain Capital i.e., Bain Capital and Cion Investment go up and down completely randomly.

Pair Corralation between Bain Capital and Cion Investment

Given the investment horizon of 90 days Bain Capital Specialty is expected to generate 0.8 times more return on investment than Cion Investment. However, Bain Capital Specialty is 1.25 times less risky than Cion Investment. It trades about 0.05 of its potential returns per unit of risk. Cion Investment Corp is currently generating about -0.06 per unit of risk. If you would invest  1,672  in Bain Capital Specialty on September 3, 2024 and sell it today you would earn a total of  40.00  from holding Bain Capital Specialty or generate 2.39% return on investment over 90 days.

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

Bain Capital Specialty  vs.  Cion Investment Corp

Bain Capital Specialty

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bain Capital Specialty are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Bain Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Cion Investment Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cion Investment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Cion Investment is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Bain Capital and Cion Investment

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

The idea behind Bain Capital Specialty and Cion Investment Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.