Correlation Between Navient Corp and Barings BDC

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

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

Diversification Opportunities for Navient Corp and Barings BDC

0.18

Correlation Coefficient

Navient Corp  Barings BDC

Average diversification

The 3 months correlation between Navient and Barings is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Navient Corp and Barings BDC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings BDC and Navient Corp 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 Navient Corp 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 Navient Corp i.e., Navient Corp and Barings BDC go up and down completely randomly.

Pair Corralation between Navient Corp and Barings BDC

Given the investment horizon of 90 days Navient Corp is expected to under-perform the Barings BDC. In addition to that, Navient Corp is 2.31 times more volatile than Barings BDC. It trades about -0.01 of its total potential returns per unit of risk. Barings BDC is currently generating about 0.04 per unit of volatility. If you would invest  962.00  in Barings BDC on September 12, 2024 and sell it today you would earn a total of  22.00  from holding Barings BDC or generate 2.29% return on investment over 90 days.

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

Navient Corp  vs.  Barings BDC

Navient Corp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Navient Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Navient Corp is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

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 Navient Corp and Barings BDC

The main advantage of trading using opposite Navient Corp and Barings BDC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Navient Corp 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 Navient Corp 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.