Correlation Between Hilton Worldwide and Barings BDC

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

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

Diversification Opportunities for Hilton Worldwide and Barings BDC

0.49

Correlation Coefficient

Hilton Worldwide  Barings BDC

Very weak diversification

The 3 months correlation between Hilton and Barings is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Worldwide Holdings and Barings BDC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings BDC and Hilton Worldwide 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 Hilton Worldwide Holdings 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 Hilton Worldwide i.e., Hilton Worldwide and Barings BDC go up and down completely randomly.

Pair Corralation between Hilton Worldwide and Barings BDC

Considering the 90-day investment horizon Hilton Worldwide is expected to generate 2.32 times less return on investment than Barings BDC. In addition to that, Hilton Worldwide is 1.13 times more volatile than Barings BDC. It trades about 0.07 of its total potential returns per unit of risk. Barings BDC is currently generating about 0.18 per unit of volatility. If you would invest  951.00  in Barings BDC on September 12, 2024 and sell it today you would earn a total of  33.00  from holding Barings BDC or generate 3.47% return on investment over 90 days.

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

Hilton Worldwide Holdings  vs.  Barings BDC

Hilton Worldwide Holdings

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hilton Worldwide Holdings are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent essential indicators, Hilton Worldwide unveiled solid returns over the last few months and may actually be approaching a breakup point.

Barings BDC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Barings BDC are ranked lower than 3 (%) 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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Hilton Worldwide and Barings BDC

The main advantage of trading using opposite Hilton Worldwide and Barings BDC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Worldwide 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 Hilton Worldwide Holdings 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.