Correlation Between Carlyle Secured and Bain Capital

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

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

Diversification Opportunities for Carlyle Secured and Bain Capital

0.96

Correlation Coefficient

Carlyle Secured  Bain Capital

Almost no diversification

The 3 months correlation between Carlyle and Bain is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Secured Lending and Bain Capital Specialty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bain Capital Specialty and Carlyle Secured 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 Carlyle Secured Lending are associated (or correlated) with Bain Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bain Capital Specialty has no effect on the direction of Carlyle Secured i.e., Carlyle Secured and Bain Capital go up and down completely randomly.

Pair Corralation between Carlyle Secured and Bain Capital

Given the investment horizon of 90 days Carlyle Secured is expected to generate 1.04 times less return on investment than Bain Capital. In addition to that, Carlyle Secured is 1.22 times more volatile than Bain Capital Specialty. It trades about 0.37 of its total potential returns per unit of risk. Bain Capital Specialty is currently generating about 0.47 per unit of volatility. If you would invest  1,558  in Bain Capital Specialty on February 2, 2024 and sell it today you would earn a total of  121.00  from holding Bain Capital Specialty or generate 7.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.65%
Values	Daily Returns

Carlyle Secured Lending  vs.  Bain Capital Specialty

Carlyle Secured Lending

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carlyle Secured Lending are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental drivers, Carlyle Secured exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bain Capital Specialty

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bain Capital Specialty are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Bain Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carlyle Secured and Bain Capital

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

The idea behind Carlyle Secured Lending and Bain Capital Specialty 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.