Correlation Between Barings BDC and Contextlogic

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

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

Diversification Opportunities for Barings BDC and Contextlogic

0.38

Correlation Coefficient

Barings BDC  Contextlogic

Weak diversification

The 3 months correlation between Barings and Contextlogic is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Barings BDC and Contextlogic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contextlogic and Barings BDC 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 Barings BDC are associated (or correlated) with Contextlogic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contextlogic has no effect on the direction of Barings BDC i.e., Barings BDC and Contextlogic go up and down completely randomly.

Pair Corralation between Barings BDC and Contextlogic

Given the investment horizon of 90 days Barings BDC is expected to generate 1.53 times less return on investment than Contextlogic. But when comparing it to its historical volatility, Barings BDC is 3.96 times less risky than Contextlogic. It trades about 0.15 of its potential returns per unit of risk. Contextlogic is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  699.00  in Contextlogic on May 2, 2025 and sell it today you would earn a total of  40.00  from holding Contextlogic or generate 5.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	56.45%
Values	Daily Returns

Barings BDC  vs.  Contextlogic

Barings BDC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Barings BDC are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting fundamental indicators, Barings BDC may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Contextlogic

Risk-Adjusted Performance

Insignificant

Over the last 90 days Contextlogic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak technical and fundamental indicators, Contextlogic exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Barings BDC and Contextlogic

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

The idea behind Barings BDC and Contextlogic 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.