Correlation Between Barloworld and Air France
Can any of the company-specific risk be diversified away by investing in both Barloworld and Air France 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 Air France 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 Air France KLM, you can compare the effects of market volatilities on Barloworld and Air France 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 Air France. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Air France.
Diversification Opportunities for Barloworld and Air France
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barloworld and Air is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Air France KLM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air France KLM 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 Air France. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air France KLM has no effect on the direction of Barloworld i.e., Barloworld and Air France go up and down completely randomly.
Pair Corralation between Barloworld and Air France
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 4.17 times more return on investment than Air France. However, Barloworld is 4.17 times more volatile than Air France KLM. It trades about 0.22 of its potential returns per unit of risk. Air France KLM is currently generating about -0.08 per unit of risk. If you would invest 423.00 in Barloworld Ltd ADR on September 18, 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Air France KLM
Performance |
| Timeline |
| Barloworld ADR |
| Air France KLM |
Barloworld and Air France Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Air France
The main advantage of trading using opposite Barloworld and Air France positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Air France 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 Air France will offset losses from the drop in Air France's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Air France vs. HUMANA INC | Air France vs. Barloworld Ltd ADR | Air France vs. Morningstar Unconstrained Allocation | Air France vs. Thrivent High Yield |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |