Correlation Between Barloworld and Atlas Corp
Can any of the company-specific risk be diversified away by investing in both Barloworld and Atlas Corp 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 Atlas Corp 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 Atlas Corp, you can compare the effects of market volatilities on Barloworld and Atlas Corp 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 Atlas Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Atlas Corp.
Diversification Opportunities for Barloworld and Atlas Corp
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barloworld and Atlas is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Atlas Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas 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 Atlas Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Corp has no effect on the direction of Barloworld i.e., Barloworld and Atlas Corp go up and down completely randomly.
Pair Corralation between Barloworld and Atlas Corp
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 14.95 times more return on investment than Atlas Corp. However, Barloworld is 14.95 times more volatile than Atlas Corp. It trades about 0.07 of its potential returns per unit of risk. Atlas Corp is currently generating about 0.1 per unit of risk. If you would invest 403.00 in Barloworld Ltd ADR on August 29, 2024 and sell it today you would earn a total of 20.00 from holding Barloworld Ltd ADR or generate 4.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Atlas Corp
Performance |
| Timeline |
| Barloworld ADR |
| Atlas Corp |
Barloworld and Atlas Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Atlas Corp
The main advantage of trading using opposite Barloworld and Atlas Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Atlas Corp 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 Atlas Corp will offset losses from the drop in Atlas Corp's long position.| Barloworld vs. United Rentals | Barloworld vs. AerCap Holdings NV | Barloworld vs. Fortress Transp Infra | Barloworld vs. U Haul Holding |
| Atlas Corp vs. Costamare | Atlas Corp vs. Costamare | Atlas Corp vs. HUMANA INC | Atlas Corp vs. Aquagold International |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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