Correlation Between BHP Group and Granite Creek
Can any of the company-specific risk be diversified away by investing in both BHP Group and Granite Creek 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 Granite Creek 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 Granite Creek Copper, you can compare the effects of market volatilities on BHP Group and Granite Creek 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 Granite Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Granite Creek.
Diversification Opportunities for BHP Group and Granite Creek
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BHP and Granite is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Granite Creek Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Creek Copper 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 Granite Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Creek Copper has no effect on the direction of BHP Group i.e., BHP Group and Granite Creek go up and down completely randomly.
Pair Corralation between BHP Group and Granite Creek
Considering the 90-day investment horizon BHP Group Limited is expected to under-perform the Granite Creek. But the stock apears to be less risky and, when comparing its historical volatility, BHP Group Limited is 20.48 times less risky than Granite Creek. The stock trades about -0.3 of its potential returns per unit of risk. The Granite Creek Copper is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1.14 in Granite Creek Copper on October 15, 2024 and sell it today you would earn a total of 0.44 from holding Granite Creek Copper or generate 38.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Granite Creek Copper
Performance |
| Timeline |
| BHP Group Limited |
| Granite Creek Copper |
BHP Group and Granite Creek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Granite Creek
The main advantage of trading using opposite BHP Group and Granite Creek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Granite Creek 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 Granite Creek will offset losses from the drop in Granite Creek'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 |
| Granite Creek vs. Macmahon Holdings Limited | Granite Creek vs. Prime Meridian Resources | Granite Creek vs. Rokmaster Resources Corp | Granite Creek vs. Hudson 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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