Correlation Between BHP Group and SLR Investment
Can any of the company-specific risk be diversified away by investing in both BHP Group and SLR Investment 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 SLR Investment 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 SLR Investment Corp, you can compare the effects of market volatilities on BHP Group and SLR Investment 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 SLR Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and SLR Investment.
Diversification Opportunities for BHP Group and SLR Investment
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BHP and SLR is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and SLR Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLR Investment Corp 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 SLR Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLR Investment Corp has no effect on the direction of BHP Group i.e., BHP Group and SLR Investment go up and down completely randomly.
Pair Corralation between BHP Group and SLR Investment
Assuming the 90 days horizon BHP Group Limited is expected to under-perform the SLR Investment. In addition to that, BHP Group is 1.35 times more volatile than SLR Investment Corp. It trades about -0.01 of its total potential returns per unit of risk. SLR Investment Corp is currently generating about 0.07 per unit of volatility. If you would invest 1,111 in SLR Investment Corp on October 9, 2024 and sell it today you would earn a total of 475.00 from holding SLR Investment Corp or generate 42.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. SLR Investment Corp
Performance |
| Timeline |
| BHP Group Limited |
| SLR Investment Corp |
BHP Group and SLR Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and SLR Investment
The main advantage of trading using opposite BHP Group and SLR Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, SLR Investment 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 SLR Investment will offset losses from the drop in SLR Investment's long position.| BHP Group vs. Gold Road Resources | BHP Group vs. EVS Broadcast Equipment | BHP Group vs. BROADWIND ENRGY | BHP Group vs. LG Electronics |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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