Correlation Between Barloworld and Affiliated Resources
Can any of the company-specific risk be diversified away by investing in both Barloworld and Affiliated 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 Barloworld and Affiliated Resources 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 Affiliated Resources Corp, you can compare the effects of market volatilities on Barloworld and Affiliated 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 Barloworld with a short position of Affiliated Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Affiliated Resources.
Diversification Opportunities for Barloworld and Affiliated Resources
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barloworld and Affiliated is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Affiliated Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affiliated Resources Corp 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 Affiliated Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affiliated Resources Corp has no effect on the direction of Barloworld i.e., Barloworld and Affiliated Resources go up and down completely randomly.
Pair Corralation between Barloworld and Affiliated Resources
Assuming the 90 days horizon Barloworld is expected to generate 5.57 times less return on investment than Affiliated Resources. But when comparing it to its historical volatility, Barloworld Ltd ADR is 2.12 times less risky than Affiliated Resources. It trades about 0.06 of its potential returns per unit of risk. Affiliated Resources Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2.00 in Affiliated Resources Corp on September 19, 2024 and sell it today you would earn a total of 5.60 from holding Affiliated Resources Corp or generate 280.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Affiliated Resources Corp
Performance |
| Timeline |
| Barloworld ADR |
| Affiliated Resources Corp |
Barloworld and Affiliated Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Affiliated Resources
The main advantage of trading using opposite Barloworld and Affiliated Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Affiliated 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 Affiliated Resources will offset losses from the drop in Affiliated Resources' long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Affiliated Resources vs. Astra International Tbk | Affiliated Resources vs. Mobileye Global Class | Affiliated Resources vs. HUMANA INC | Affiliated Resources vs. Barloworld Ltd ADR |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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