Correlation Between Barloworld and AGC
Can any of the company-specific risk be diversified away by investing in both Barloworld and AGC 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 AGC 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 AGC Inc ADR, you can compare the effects of market volatilities on Barloworld and AGC 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 AGC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and AGC.
Diversification Opportunities for Barloworld and AGC
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barloworld and AGC is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and AGC Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGC Inc ADR 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 AGC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGC Inc ADR has no effect on the direction of Barloworld i.e., Barloworld and AGC go up and down completely randomly.
Pair Corralation between Barloworld and AGC
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 2.05 times more return on investment than AGC. However, Barloworld is 2.05 times more volatile than AGC Inc ADR. It trades about 0.01 of its potential returns per unit of risk. AGC Inc ADR is currently generating about 0.0 per unit of risk. If you would invest 468.00 in Barloworld Ltd ADR on August 31, 2024 and sell it today you would lose (45.00) from holding Barloworld Ltd ADR or give up 9.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 62.03% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. AGC Inc ADR
Performance |
| Timeline |
| Barloworld ADR |
| AGC Inc ADR |
Barloworld and AGC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and AGC
The main advantage of trading using opposite Barloworld and AGC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, AGC 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 AGC will offset losses from the drop in AGC's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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