Correlation Between BHP Group and Skyharbour Resources
Can any of the company-specific risk be diversified away by investing in both BHP Group and Skyharbour 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 Skyharbour 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 Skyharbour Resources, you can compare the effects of market volatilities on BHP Group and Skyharbour 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 Skyharbour Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Skyharbour Resources.
Diversification Opportunities for BHP Group and Skyharbour Resources
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BHP and Skyharbour is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Skyharbour Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skyharbour Resources 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 Skyharbour Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skyharbour Resources has no effect on the direction of BHP Group i.e., BHP Group and Skyharbour Resources go up and down completely randomly.
Pair Corralation between BHP Group and Skyharbour Resources
Assuming the 90 days horizon BHP Group Limited is expected to under-perform the Skyharbour Resources. In addition to that, BHP Group is 1.16 times more volatile than Skyharbour Resources. It trades about -0.11 of its total potential returns per unit of risk. Skyharbour Resources is currently generating about 0.02 per unit of volatility. If you would invest 31.00 in Skyharbour Resources on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Skyharbour Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Skyharbour Resources
Performance |
| Timeline |
| BHP Group Limited |
| Skyharbour Resources |
BHP Group and Skyharbour Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Skyharbour Resources
The main advantage of trading using opposite BHP Group and Skyharbour Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Skyharbour 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 Skyharbour Resources will offset losses from the drop in Skyharbour Resources' long position.| BHP Group vs. Anglo American PLC | BHP Group vs. Avarone Metals | BHP Group vs. Huntsman Exploration | BHP Group vs. Aurelia Metals Limited |
| Skyharbour Resources vs. GoviEx Uranium | Skyharbour Resources vs. CanAlaska Uranium | Skyharbour Resources vs. Fission Uranium Corp | Skyharbour Resources vs. Deep Yellow |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |