Correlation Between Barloworld and LAir Liquide
Can any of the company-specific risk be diversified away by investing in both Barloworld and LAir Liquide 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 LAir Liquide 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 LAir Liquide SA, you can compare the effects of market volatilities on Barloworld and LAir Liquide 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 LAir Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and LAir Liquide.
Diversification Opportunities for Barloworld and LAir Liquide
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barloworld and LAir is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and LAir Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAir Liquide SA 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 LAir Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAir Liquide SA has no effect on the direction of Barloworld i.e., Barloworld and LAir Liquide go up and down completely randomly.
Pair Corralation between Barloworld and LAir Liquide
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 5.8 times more return on investment than LAir Liquide. However, Barloworld is 5.8 times more volatile than LAir Liquide SA. It trades about 0.03 of its potential returns per unit of risk. LAir Liquide SA is currently generating about 0.05 per unit of risk. If you would invest 581.00 in Barloworld Ltd ADR on August 25, 2024 and sell it today you would lose (158.00) from holding Barloworld Ltd ADR or give up 27.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 71.63% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. LAir Liquide SA
Performance |
| Timeline |
| Barloworld ADR |
| LAir Liquide SA |
Barloworld and LAir Liquide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and LAir Liquide
The main advantage of trading using opposite Barloworld and LAir Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, LAir Liquide 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 LAir Liquide will offset losses from the drop in LAir Liquide's long position.| Barloworld vs. United Rentals | Barloworld vs. AerCap Holdings NV | Barloworld vs. Fortress Transp Infra | Barloworld vs. U Haul Holding |
| LAir Liquide vs. First Graphene | LAir Liquide vs. HUMANA INC | LAir Liquide vs. Aquagold International | LAir Liquide 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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