Correlation Between United States and Balfour Beatty
Can any of the company-specific risk be diversified away by investing in both United States and Balfour Beatty 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 United States and Balfour Beatty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Balfour Beatty plc, you can compare the effects of market volatilities on United States and Balfour Beatty 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 United States with a short position of Balfour Beatty. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Balfour Beatty.
Diversification Opportunities for United States and Balfour Beatty
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between United and Balfour is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Balfour Beatty plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balfour Beatty plc and United States 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 United States Steel are associated (or correlated) with Balfour Beatty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balfour Beatty plc has no effect on the direction of United States i.e., United States and Balfour Beatty go up and down completely randomly.
Pair Corralation between United States and Balfour Beatty
Assuming the 90 days trading horizon United States is expected to generate 10.94 times less return on investment than Balfour Beatty. In addition to that, United States is 2.88 times more volatile than Balfour Beatty plc. It trades about 0.01 of its total potential returns per unit of risk. Balfour Beatty plc is currently generating about 0.17 per unit of volatility. If you would invest 34,663 in Balfour Beatty plc on September 14, 2024 and sell it today you would earn a total of 10,757 from holding Balfour Beatty plc or generate 31.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
United States Steel vs. Balfour Beatty plc
Performance |
| Timeline |
| United States Steel |
| Balfour Beatty plc |
United States and Balfour Beatty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Balfour Beatty
The main advantage of trading using opposite United States and Balfour Beatty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, Balfour Beatty 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 Balfour Beatty will offset losses from the drop in Balfour Beatty's long position.| United States vs. Samsung Electronics Co | United States vs. Samsung Electronics Co | United States vs. Hyundai Motor | United States vs. Reliance Industries Ltd |
| Balfour Beatty vs. Liontrust Asset Management | Balfour Beatty vs. Catena Media PLC | Balfour Beatty vs. Liberty Media Corp | Balfour Beatty vs. MediaZest plc |
Check out your portfolio center.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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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