Correlation Between BHP Group and Camrova Resources
Can any of the company-specific risk be diversified away by investing in both BHP Group and Camrova Resources 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 Camrova Resources 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 Camrova Resources, you can compare the effects of market volatilities on BHP Group and Camrova Resources 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 Camrova Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Camrova Resources.
Diversification Opportunities for BHP Group and Camrova Resources
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BHP and Camrova is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Camrova Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camrova Resources 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 Camrova Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camrova Resources has no effect on the direction of BHP Group i.e., BHP Group and Camrova Resources go up and down completely randomly.
Pair Corralation between BHP Group and Camrova Resources
If you would invest 4,921 in BHP Group Limited on November 2, 2024 and sell it today you would earn a total of 54.00 from holding BHP Group Limited or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.74% |
| Values | Daily Returns |
BHP Group Limited vs. Camrova Resources
Performance |
| Timeline |
| BHP Group Limited |
| Camrova Resources |
BHP Group and Camrova Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Camrova Resources
The main advantage of trading using opposite BHP Group and Camrova Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Camrova Resources 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 Camrova Resources will offset losses from the drop in Camrova Resources' 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 |
| Camrova Resources vs. Orion Office Reit | Camrova Resources vs. Bassett Furniture Industries | Camrova Resources vs. Lowes Companies | Camrova Resources vs. PennantPark Investment |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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