Correlation Between Bowler Metcalf and Firstrand
Can any of the company-specific risk be diversified away by investing in both Bowler Metcalf and Firstrand 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 Bowler Metcalf and Firstrand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bowler Metcalf and Firstrand, you can compare the effects of market volatilities on Bowler Metcalf and Firstrand 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 Bowler Metcalf with a short position of Firstrand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bowler Metcalf and Firstrand.
Diversification Opportunities for Bowler Metcalf and Firstrand
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bowler and Firstrand is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bowler Metcalf and Firstrand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firstrand and Bowler Metcalf 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 Bowler Metcalf are associated (or correlated) with Firstrand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firstrand has no effect on the direction of Bowler Metcalf i.e., Bowler Metcalf and Firstrand go up and down completely randomly.
Pair Corralation between Bowler Metcalf and Firstrand
Assuming the 90 days trading horizon Bowler Metcalf is expected to generate 3.07 times more return on investment than Firstrand. However, Bowler Metcalf is 3.07 times more volatile than Firstrand. It trades about 0.04 of its potential returns per unit of risk. Firstrand is currently generating about 0.05 per unit of risk. If you would invest 90,478 in Bowler Metcalf on August 28, 2024 and sell it today you would earn a total of 45,422 from holding Bowler Metcalf or generate 50.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bowler Metcalf vs. Firstrand
Performance |
| Timeline |
| Bowler Metcalf |
| Firstrand |
Bowler Metcalf and Firstrand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bowler Metcalf and Firstrand
The main advantage of trading using opposite Bowler Metcalf and Firstrand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bowler Metcalf position performs unexpectedly, Firstrand 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 Firstrand will offset losses from the drop in Firstrand's long position.| Bowler Metcalf vs. Nampak | Bowler Metcalf vs. Sasol Ltd Bee | Bowler Metcalf vs. Growthpoint Properties | Bowler Metcalf vs. AfricaRhodium ETF |
| Firstrand vs. Centaur Bci Balanced | Firstrand vs. Sabvest Capital | Firstrand vs. Growthpoint Properties | Firstrand vs. Bowler Metcalf |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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