Correlation Between BHP Group and Spey Resources
Can any of the company-specific risk be diversified away by investing in both BHP Group and Spey 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 Spey 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 Spey Resources Corp, you can compare the effects of market volatilities on BHP Group and Spey 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 Spey Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Spey Resources.
Diversification Opportunities for BHP Group and Spey Resources
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BHP and Spey is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Spey Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spey Resources 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 Spey Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spey Resources Corp has no effect on the direction of BHP Group i.e., BHP Group and Spey Resources go up and down completely randomly.
Pair Corralation between BHP Group and Spey Resources
Considering the 90-day investment horizon BHP Group Limited is expected to under-perform the Spey Resources. But the stock apears to be less risky and, when comparing its historical volatility, BHP Group Limited is 11.33 times less risky than Spey Resources. The stock trades about -0.16 of its potential returns per unit of risk. The Spey Resources Corp is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 5.50 in Spey Resources Corp on September 4, 2024 and sell it today you would earn a total of 4.50 from holding Spey Resources Corp or generate 81.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
BHP Group Limited vs. Spey Resources Corp
Performance |
| Timeline |
| BHP Group Limited |
| Spey Resources Corp |
BHP Group and Spey Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Spey Resources
The main advantage of trading using opposite BHP Group and Spey Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Spey 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 Spey Resources will offset losses from the drop in Spey 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 |
| Spey Resources vs. Grid Metals Corp | Spey Resources vs. POWR Lithium Corp | Spey Resources vs. First American Silver | Spey Resources vs. IGO Limited |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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