Correlation Between BHP Group and Manganese
Can any of the company-specific risk be diversified away by investing in both BHP Group and Manganese 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 Manganese 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 Manganese X Energy, you can compare the effects of market volatilities on BHP Group and Manganese 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 Manganese. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Manganese.
Diversification Opportunities for BHP Group and Manganese
Very good diversification
The 3 months correlation between BHP and Manganese is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Manganese X Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manganese X Energy 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 Manganese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manganese X Energy has no effect on the direction of BHP Group i.e., BHP Group and Manganese go up and down completely randomly.
Pair Corralation between BHP Group and Manganese
Assuming the 90 days horizon BHP Group Limited is expected to generate 0.44 times more return on investment than Manganese. However, BHP Group Limited is 2.29 times less risky than Manganese. It trades about 0.02 of its potential returns per unit of risk. Manganese X Energy is currently generating about -0.01 per unit of risk. If you would invest 2,614 in BHP Group Limited on August 29, 2024 and sell it today you would lose (25.00) from holding BHP Group Limited or give up 0.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Manganese X Energy
Performance |
| Timeline |
| BHP Group Limited |
| Manganese X Energy |
BHP Group and Manganese Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Manganese
The main advantage of trading using opposite BHP Group and Manganese positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Manganese 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 Manganese will offset losses from the drop in Manganese's long position.| BHP Group vs. Anglo American PLC | BHP Group vs. Avarone Metals | BHP Group vs. Huntsman Exploration | BHP Group vs. Aurelia Metals Limited |
| Manganese vs. Talon Metals Corp | Manganese vs. Electra Battery Materials | Manganese vs. Lithium Americas Corp | Manganese vs. New Age Metals |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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