Correlation Between BHP Group and Viva Leisure
Can any of the company-specific risk be diversified away by investing in both BHP Group and Viva Leisure 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 Viva Leisure 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 Viva Leisure, you can compare the effects of market volatilities on BHP Group and Viva Leisure 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 Viva Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Viva Leisure.
Diversification Opportunities for BHP Group and Viva Leisure
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BHP and Viva is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Viva Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viva Leisure 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 Viva Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viva Leisure has no effect on the direction of BHP Group i.e., BHP Group and Viva Leisure go up and down completely randomly.
Pair Corralation between BHP Group and Viva Leisure
Assuming the 90 days trading horizon BHP Group is expected to generate 6.49 times less return on investment than Viva Leisure. But when comparing it to its historical volatility, BHP Group Limited is 2.28 times less risky than Viva Leisure. It trades about 0.0 of its potential returns per unit of risk. Viva Leisure is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 145.00 in Viva Leisure on November 3, 2024 and sell it today you would earn a total of 0.00 from holding Viva Leisure or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Viva Leisure
Performance |
| Timeline |
| BHP Group Limited |
| Viva Leisure |
BHP Group and Viva Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Viva Leisure
The main advantage of trading using opposite BHP Group and Viva Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Viva Leisure 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 Viva Leisure will offset losses from the drop in Viva Leisure's long position.| BHP Group vs. Auctus Alternative Investments | BHP Group vs. Oneview Healthcare PLC | BHP Group vs. A1 Investments Resources | BHP Group vs. Carlton Investments |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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