Correlation Between Victory Integrity and Barings BDC

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

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

Diversification Opportunities for Victory Integrity and Barings BDC

0.61

Correlation Coefficient

Victory Integrity  Barings BDC

Poor diversification

The 3 months correlation between Victory and Barings is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Victory Integrity Smallmid Cap and Barings BDC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings BDC and Victory Integrity 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 Victory Integrity Smallmid Cap 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 Victory Integrity i.e., Victory Integrity and Barings BDC go up and down completely randomly.

Pair Corralation between Victory Integrity and Barings BDC

Assuming the 90 days horizon Victory Integrity Smallmid Cap is expected to under-perform the Barings BDC. But the mutual fund apears to be less risky and, when comparing its historical volatility, Victory Integrity Smallmid Cap is 1.14 times less risky than Barings BDC. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Barings BDC is currently generating about 0.18 of returns per unit of risk over similar time horizon. 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	Significant
Accuracy	100.0%
Values	Daily Returns

Victory Integrity Smallmid Cap  vs.  Barings BDC

Victory Integrity

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Integrity Smallmid Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Victory Integrity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Victory Integrity and Barings BDC

The main advantage of trading using opposite Victory Integrity and Barings BDC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victory Integrity 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 Victory Integrity Smallmid Cap 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.