Correlation Between International Smaller and Barloworld
Can any of the company-specific risk be diversified away by investing in both International Smaller and Barloworld 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 International Smaller and Barloworld into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The International Smaller and Barloworld Ltd ADR, you can compare the effects of market volatilities on International Smaller and Barloworld 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 International Smaller with a short position of Barloworld. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Smaller and Barloworld.
Diversification Opportunities for International Smaller and Barloworld
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Barloworld is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding The International Smaller and Barloworld Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barloworld ADR and International Smaller 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 The International Smaller are associated (or correlated) with Barloworld. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barloworld ADR has no effect on the direction of International Smaller i.e., International Smaller and Barloworld go up and down completely randomly.
Pair Corralation between International Smaller and Barloworld
Assuming the 90 days horizon The International Smaller is expected to under-perform the Barloworld. But the mutual fund apears to be less risky and, when comparing its historical volatility, The International Smaller is 6.4 times less risky than Barloworld. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Barloworld Ltd ADR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 403.00 in Barloworld Ltd ADR on August 31, 2024 and sell it today you would earn a total of 20.00 from holding Barloworld Ltd ADR or generate 4.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The International Smaller vs. Barloworld Ltd ADR
Performance |
| Timeline |
| The International Smaller |
| Barloworld ADR |
International Smaller and Barloworld Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Smaller and Barloworld
The main advantage of trading using opposite International Smaller and Barloworld positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Smaller position performs unexpectedly, Barloworld 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 Barloworld will offset losses from the drop in Barloworld's long position.| International Smaller vs. Oppenheimer Intl Small | International Smaller vs. T Rowe Price | International Smaller vs. HUMANA INC | International Smaller vs. Aquagold International |
| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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