Correlation Between BHP Group and Infinite Ore
Can any of the company-specific risk be diversified away by investing in both BHP Group and Infinite Ore 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 Infinite Ore 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 Infinite Ore Corp, you can compare the effects of market volatilities on BHP Group and Infinite Ore 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 Infinite Ore. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Infinite Ore.
Diversification Opportunities for BHP Group and Infinite Ore
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BHP and Infinite is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Infinite Ore Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infinite Ore 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 Infinite Ore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infinite Ore Corp has no effect on the direction of BHP Group i.e., BHP Group and Infinite Ore go up and down completely randomly.
Pair Corralation between BHP Group and Infinite Ore
Considering the 90-day investment horizon BHP Group is expected to generate 21.7 times less return on investment than Infinite Ore. But when comparing it to its historical volatility, BHP Group Limited is 3.17 times less risky than Infinite Ore. It trades about 0.06 of its potential returns per unit of risk. Infinite Ore Corp is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 1.20 in Infinite Ore Corp on October 26, 2024 and sell it today you would earn a total of 0.30 from holding Infinite Ore Corp or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
BHP Group Limited vs. Infinite Ore Corp
Performance |
| Timeline |
| BHP Group Limited |
| Infinite Ore Corp |
BHP Group and Infinite Ore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Infinite Ore
The main advantage of trading using opposite BHP Group and Infinite Ore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Infinite Ore 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 Infinite Ore will offset losses from the drop in Infinite Ore's long position.| BHP Group vs. Vale SA ADR | BHP Group vs. Teck Resources Ltd | BHP Group vs. Lithium Americas Corp | BHP Group vs. MP Materials Corp |
| Infinite Ore vs. Pampa Metals | Infinite Ore vs. Progressive Planet Solutions | Infinite Ore vs. Searchlight Resources | Infinite Ore vs. Durango Resources |
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.
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