Correlation Between BHP Group and Centor Energy
Can any of the company-specific risk be diversified away by investing in both BHP Group and Centor Energy 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 Centor Energy 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 Centor Energy, you can compare the effects of market volatilities on BHP Group and Centor Energy 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 Centor Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Centor Energy.
Diversification Opportunities for BHP Group and Centor Energy
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BHP and Centor is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Centor Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centor Energy 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 Centor Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centor Energy has no effect on the direction of BHP Group i.e., BHP Group and Centor Energy go up and down completely randomly.
Pair Corralation between BHP Group and Centor Energy
Considering the 90-day investment horizon BHP Group Limited is expected to generate 0.25 times more return on investment than Centor Energy. However, BHP Group Limited is 4.01 times less risky than Centor Energy. It trades about -0.02 of its potential returns per unit of risk. Centor Energy is currently generating about -0.06 per unit of risk. If you would invest 5,820 in BHP Group Limited on August 29, 2024 and sell it today you would lose (701.00) from holding BHP Group Limited or give up 12.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Centor Energy
Performance |
| Timeline |
| BHP Group Limited |
| Centor Energy |
BHP Group and Centor Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Centor Energy
The main advantage of trading using opposite BHP Group and Centor Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Centor Energy 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 Centor Energy will offset losses from the drop in Centor Energy'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 |
| Centor Energy vs. Vale SA ADR | Centor Energy vs. BHP Group Limited | Centor Energy vs. Glencore PLC ADR | Centor Energy vs. Piedmont Lithium Ltd |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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