Correlation Between BHP Group and Impala Platinum
Can any of the company-specific risk be diversified away by investing in both BHP Group and Impala Platinum 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 Impala Platinum 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 Impala Platinum Holdings, you can compare the effects of market volatilities on BHP Group and Impala Platinum 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 Impala Platinum. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Impala Platinum.
Diversification Opportunities for BHP Group and Impala Platinum
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BHP and Impala is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Impala Platinum Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impala Platinum Holdings 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 Impala Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impala Platinum Holdings has no effect on the direction of BHP Group i.e., BHP Group and Impala Platinum go up and down completely randomly.
Pair Corralation between BHP Group and Impala Platinum
Assuming the 90 days trading horizon BHP Group Limited is expected to generate 0.31 times more return on investment than Impala Platinum. However, BHP Group Limited is 3.2 times less risky than Impala Platinum. It trades about -0.1 of its potential returns per unit of risk. Impala Platinum Holdings is currently generating about -0.05 per unit of risk. If you would invest 2,555 in BHP Group Limited on September 1, 2024 and sell it today you would lose (88.00) from holding BHP Group Limited or give up 3.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
BHP Group Limited vs. Impala Platinum Holdings
Performance |
| Timeline |
| BHP Group Limited |
| Impala Platinum Holdings |
BHP Group and Impala Platinum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Impala Platinum
The main advantage of trading using opposite BHP Group and Impala Platinum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Impala Platinum 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 Impala Platinum will offset losses from the drop in Impala Platinum's long position.| BHP Group vs. Universal Insurance Holdings | BHP Group vs. Singapore Reinsurance | BHP Group vs. Evolution Mining Limited | BHP Group vs. Reinsurance Group of |
| Impala Platinum vs. BHP Group Limited | Impala Platinum vs. Rio Tinto Group | Impala Platinum vs. Rio Tinto Group | Impala Platinum vs. Vale SA |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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