Correlation Between Barloworld and Auburn Bancorp
Can any of the company-specific risk be diversified away by investing in both Barloworld and Auburn Bancorp 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 Barloworld and Auburn Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barloworld Ltd ADR and Auburn Bancorp, you can compare the effects of market volatilities on Barloworld and Auburn Bancorp 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 Barloworld with a short position of Auburn Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Auburn Bancorp.
Diversification Opportunities for Barloworld and Auburn Bancorp
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barloworld and Auburn is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Auburn Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auburn Bancorp and Barloworld 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 Barloworld Ltd ADR are associated (or correlated) with Auburn Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auburn Bancorp has no effect on the direction of Barloworld i.e., Barloworld and Auburn Bancorp go up and down completely randomly.
Pair Corralation between Barloworld and Auburn Bancorp
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 2.96 times more return on investment than Auburn Bancorp. However, Barloworld is 2.96 times more volatile than Auburn Bancorp. It trades about 0.22 of its potential returns per unit of risk. Auburn Bancorp is currently generating about 0.04 per unit of risk. If you would invest 423.00 in Barloworld Ltd ADR on September 14, 2024 and sell it today you would earn a total of 155.00 from holding Barloworld Ltd ADR or generate 36.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Auburn Bancorp
Performance |
| Timeline |
| Barloworld ADR |
| Auburn Bancorp |
Barloworld and Auburn Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Auburn Bancorp
The main advantage of trading using opposite Barloworld and Auburn Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Auburn Bancorp 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 Auburn Bancorp will offset losses from the drop in Auburn Bancorp's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Auburn Bancorp vs. Freedom Bank of | Auburn Bancorp vs. HUMANA INC | Auburn Bancorp vs. Barloworld Ltd ADR | Auburn Bancorp vs. Morningstar Unconstrained Allocation |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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