Correlation Between Barloworld and Aston Martin
Can any of the company-specific risk be diversified away by investing in both Barloworld and Aston Martin 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 Aston Martin 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 Aston Martin Lagonda, you can compare the effects of market volatilities on Barloworld and Aston Martin 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 Aston Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Aston Martin.
Diversification Opportunities for Barloworld and Aston Martin
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Barloworld and Aston is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Aston Martin Lagonda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aston Martin Lagonda 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 Aston Martin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aston Martin Lagonda has no effect on the direction of Barloworld i.e., Barloworld and Aston Martin go up and down completely randomly.
Pair Corralation between Barloworld and Aston Martin
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 2.65 times more return on investment than Aston Martin. However, Barloworld is 2.65 times more volatile than Aston Martin Lagonda. It trades about 0.09 of its potential returns per unit of risk. Aston Martin Lagonda is currently generating about -0.01 per unit of risk. If you would invest 403.00 in Barloworld Ltd ADR on October 25, 2024 and sell it today you would earn a total of 123.00 from holding Barloworld Ltd ADR or generate 30.52% 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. Aston Martin Lagonda
Performance |
| Timeline |
| Barloworld ADR |
| Aston Martin Lagonda |
Barloworld and Aston Martin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Aston Martin
The main advantage of trading using opposite Barloworld and Aston Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Aston Martin 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 Aston Martin will offset losses from the drop in Aston Martin's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Aston Martin vs. Geely Automobile Holdings | Aston Martin vs. Guangzhou Automobile Group | Aston Martin vs. Dowlais Group plc | Aston Martin vs. NFI Group |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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