Correlation Between BHP Group and Filo Mining
Can any of the company-specific risk be diversified away by investing in both BHP Group and Filo Mining 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 Filo Mining 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 Filo Mining Corp, you can compare the effects of market volatilities on BHP Group and Filo Mining 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 Filo Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Filo Mining.
Diversification Opportunities for BHP Group and Filo Mining
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BHP and Filo is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Filo Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Filo Mining 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 Filo Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Filo Mining Corp has no effect on the direction of BHP Group i.e., BHP Group and Filo Mining go up and down completely randomly.
Pair Corralation between BHP Group and Filo Mining
Assuming the 90 days horizon BHP Group Limited is expected to under-perform the Filo Mining. In addition to that, BHP Group is 6.01 times more volatile than Filo Mining Corp. It trades about -0.02 of its total potential returns per unit of risk. Filo Mining Corp is currently generating about -0.03 per unit of volatility. If you would invest 2,349 in Filo Mining Corp on August 25, 2024 and sell it today you would lose (17.00) from holding Filo Mining Corp or give up 0.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Filo Mining Corp
Performance |
| Timeline |
| BHP Group Limited |
| Filo Mining Corp |
BHP Group and Filo Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Filo Mining
The main advantage of trading using opposite BHP Group and Filo Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Filo Mining 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 Filo Mining will offset losses from the drop in Filo Mining's long position.| BHP Group vs. Norra Metals Corp | BHP Group vs. Amarc Resources | BHP Group vs. ZincX Resources Corp | BHP Group vs. Nuinsco Resources Limited |
| Filo Mining vs. Lotus Resources Limited | Filo Mining vs. Golden Goliath Resources | Filo Mining vs. Stria Lithium | Filo Mining vs. Monitor Ventures |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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