Correlation Between BHP Group and Ecclesiastical Insurance
Can any of the company-specific risk be diversified away by investing in both BHP Group and Ecclesiastical Insurance 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 Ecclesiastical Insurance 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 Ecclesiastical Insurance Office, you can compare the effects of market volatilities on BHP Group and Ecclesiastical Insurance 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 Ecclesiastical Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Ecclesiastical Insurance.
Diversification Opportunities for BHP Group and Ecclesiastical Insurance
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BHP and Ecclesiastical is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Ecclesiastical Insurance Offic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecclesiastical Insurance 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 Ecclesiastical Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecclesiastical Insurance has no effect on the direction of BHP Group i.e., BHP Group and Ecclesiastical Insurance go up and down completely randomly.
Pair Corralation between BHP Group and Ecclesiastical Insurance
Assuming the 90 days trading horizon BHP Group Limited is expected to generate 0.98 times more return on investment than Ecclesiastical Insurance. However, BHP Group Limited is 1.02 times less risky than Ecclesiastical Insurance. It trades about 0.2 of its potential returns per unit of risk. Ecclesiastical Insurance Office is currently generating about -0.02 per unit of risk. If you would invest 196,300 in BHP Group Limited on October 24, 2024 and sell it today you would earn a total of 7,700 from holding BHP Group Limited or generate 3.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
BHP Group Limited vs. Ecclesiastical Insurance Offic
Performance |
| Timeline |
| BHP Group Limited |
| Ecclesiastical Insurance |
BHP Group and Ecclesiastical Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Ecclesiastical Insurance
The main advantage of trading using opposite BHP Group and Ecclesiastical Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Ecclesiastical Insurance 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 Ecclesiastical Insurance will offset losses from the drop in Ecclesiastical Insurance's long position.| BHP Group vs. Ecclesiastical Insurance Office | BHP Group vs. Indutrade AB | BHP Group vs. Air Products Chemicals | BHP Group vs. Central Asia Metals |
| Ecclesiastical Insurance vs. Diversified Energy | Ecclesiastical Insurance vs. Ross Stores | Ecclesiastical Insurance vs. Solstad Offshore ASA | Ecclesiastical Insurance vs. BW Offshore |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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