Correlation Between BHP Group and Boxer Retail
Can any of the company-specific risk be diversified away by investing in both BHP Group and Boxer Retail 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 BHP Group and Boxer Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BHP Group Limited and Boxer Retail, you can compare the effects of market volatilities on BHP Group and Boxer Retail 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 BHP Group with a short position of Boxer Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Boxer Retail.
Diversification Opportunities for BHP Group and Boxer Retail
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between BHP and Boxer is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Boxer Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boxer Retail and BHP Group 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 BHP Group Limited are associated (or correlated) with Boxer Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boxer Retail has no effect on the direction of BHP Group i.e., BHP Group and Boxer Retail go up and down completely randomly.
Pair Corralation between BHP Group and Boxer Retail
Assuming the 90 days trading horizon BHP Group Limited is expected to under-perform the Boxer Retail. In addition to that, BHP Group is 1.34 times more volatile than Boxer Retail. It trades about -0.45 of its total potential returns per unit of risk. Boxer Retail is currently generating about -0.11 per unit of volatility. If you would invest 642,500 in Boxer Retail on October 9, 2024 and sell it today you would lose (7,500) from holding Boxer Retail or give up 1.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Boxer Retail
Performance |
| Timeline |
| BHP Group Limited |
| Boxer Retail |
BHP Group and Boxer Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Boxer Retail
The main advantage of trading using opposite BHP Group and Boxer Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Boxer Retail 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 Boxer Retail will offset losses from the drop in Boxer Retail's long position.| BHP Group vs. Harmony Gold Mining | BHP Group vs. Reinet Investments SCA | BHP Group vs. Astoria Investments | BHP Group vs. Deneb Investments |
| Boxer Retail vs. Reinet Investments SCA | Boxer Retail vs. Brimstone Investment | Boxer Retail vs. Frontier Transport Holdings | Boxer Retail vs. Safari Investments RSA |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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