Correlation Between BHP Group and United States
Can any of the company-specific risk be diversified away by investing in both BHP Group and United States 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 United States 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 United States Antimony, you can compare the effects of market volatilities on BHP Group and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and United States.
Diversification Opportunities for BHP Group and United States
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BHP and United is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and United States Antimony in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Antimony 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Antimony has no effect on the direction of BHP Group i.e., BHP Group and United States go up and down completely randomly.
Pair Corralation between BHP Group and United States
Considering the 90-day investment horizon BHP Group Limited is expected to under-perform the United States. But the stock apears to be less risky and, when comparing its historical volatility, BHP Group Limited is 4.34 times less risky than United States. The stock trades about -0.26 of its potential returns per unit of risk. The United States Antimony is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 64.00 in United States Antimony on August 30, 2024 and sell it today you would earn a total of 15.01 from holding United States Antimony or generate 23.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
BHP Group Limited vs. United States Antimony
Performance |
| Timeline |
| BHP Group Limited |
| United States Antimony |
BHP Group and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and United States
The main advantage of trading using opposite BHP Group and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' 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 |
| United States vs. Syrah Resources Limited | United States vs. Nouveau Monde Graphite | United States vs. Trilogy Metals | United States vs. Global Atomic Corp |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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