Correlation Between Bell Financial and JB Hi
Can any of the company-specific risk be diversified away by investing in both Bell Financial and JB Hi 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 Bell Financial and JB Hi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bell Financial Group and JB Hi Fi, you can compare the effects of market volatilities on Bell Financial and JB Hi 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 Bell Financial with a short position of JB Hi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bell Financial and JB Hi.
Diversification Opportunities for Bell Financial and JB Hi
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bell and JBH is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Bell Financial Group and JB Hi Fi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JB Hi Fi and Bell Financial 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 Bell Financial Group are associated (or correlated) with JB Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JB Hi Fi has no effect on the direction of Bell Financial i.e., Bell Financial and JB Hi go up and down completely randomly.
Pair Corralation between Bell Financial and JB Hi
Assuming the 90 days trading horizon Bell Financial is expected to generate 4.05 times less return on investment than JB Hi. But when comparing it to its historical volatility, Bell Financial Group is 1.59 times less risky than JB Hi. It trades about 0.08 of its potential returns per unit of risk. JB Hi Fi is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 9,523 in JB Hi Fi on November 6, 2024 and sell it today you would earn a total of 602.00 from holding JB Hi Fi or generate 6.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bell Financial Group vs. JB Hi Fi
Performance |
| Timeline |
| Bell Financial Group |
| JB Hi Fi |
Bell Financial and JB Hi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bell Financial and JB Hi
The main advantage of trading using opposite Bell Financial and JB Hi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bell Financial position performs unexpectedly, JB Hi 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 JB Hi will offset losses from the drop in JB Hi's long position.| Bell Financial vs. Advanced Braking Technology | Bell Financial vs. Gold Road Resources | Bell Financial vs. Perseus Mining | Bell Financial vs. Dug Technology |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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