Correlation Between BHP Group and British Amer
Can any of the company-specific risk be diversified away by investing in both BHP Group and British Amer 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 British Amer 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 Bailador Technology Invest, you can compare the effects of market volatilities on BHP Group and British Amer 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 British Amer. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and British Amer.
Diversification Opportunities for BHP Group and British Amer
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BHP and British is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Bailador Technology Invest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bailador Technology 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 British Amer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bailador Technology has no effect on the direction of BHP Group i.e., BHP Group and British Amer go up and down completely randomly.
Pair Corralation between BHP Group and British Amer
Assuming the 90 days trading horizon BHP Group Limited is expected to under-perform the British Amer. In addition to that, BHP Group is 1.06 times more volatile than Bailador Technology Invest. It trades about 0.0 of its total potential returns per unit of risk. Bailador Technology Invest is currently generating about 0.03 per unit of volatility. If you would invest 111.00 in Bailador Technology Invest on November 27, 2024 and sell it today you would earn a total of 14.00 from holding Bailador Technology Invest or generate 12.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Bailador Technology Invest
Performance |
| Timeline |
| BHP Group Limited |
| Bailador Technology |
BHP Group and British Amer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and British Amer
The main advantage of trading using opposite BHP Group and British Amer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, British Amer 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 British Amer will offset losses from the drop in British Amer's long position.| BHP Group vs. Charter Hall Education | BHP Group vs. Charter Hall Retail | BHP Group vs. Epsilon Healthcare | BHP Group vs. Duxton Broadacre Farms |
| British Amer vs. Skycity Entertainment Group | British Amer vs. Champion Iron | British Amer vs. TPG Telecom | British Amer vs. Autosports Group |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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