Correlation Between BHP Group and Australia
Can any of the company-specific risk be diversified away by investing in both BHP Group and Australia 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 Australia 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 Australia and New, you can compare the effects of market volatilities on BHP Group and Australia 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 Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Australia.
Diversification Opportunities for BHP Group and Australia
Very good diversification
The 3 months correlation between BHP and Australia is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Australia and New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australia and New 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 Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australia and New has no effect on the direction of BHP Group i.e., BHP Group and Australia go up and down completely randomly.
Pair Corralation between BHP Group and Australia
Assuming the 90 days trading horizon BHP Group Limited is expected to under-perform the Australia. In addition to that, BHP Group is 1.32 times more volatile than Australia and New. It trades about 0.0 of its total potential returns per unit of risk. Australia and New is currently generating about 0.09 per unit of volatility. If you would invest 2,085 in Australia and New on August 28, 2024 and sell it today you would earn a total of 1,098 from holding Australia and New or generate 52.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Australia and New
Performance |
| Timeline |
| BHP Group Limited |
| Australia and New |
BHP Group and Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Australia
The main advantage of trading using opposite BHP Group and Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Australia 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 Australia will offset losses from the drop in Australia's long position.| BHP Group vs. Clime Investment Management | BHP Group vs. Mach7 Technologies | BHP Group vs. Air New Zealand | BHP Group vs. K2 Asset Management |
| Australia vs. Stelar Metals | Australia vs. Cleanaway Waste Management | Australia vs. Centaurus Metals | Australia vs. Patriot Battery Metals |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |