Correlation Between Barloworld and Ave Maria
Can any of the company-specific risk be diversified away by investing in both Barloworld and Ave Maria 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 Ave Maria 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 Ave Maria Growth, you can compare the effects of market volatilities on Barloworld and Ave Maria 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 Ave Maria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Ave Maria.
Diversification Opportunities for Barloworld and Ave Maria
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barloworld and Ave is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Ave Maria Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ave Maria Growth 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 Ave Maria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ave Maria Growth has no effect on the direction of Barloworld i.e., Barloworld and Ave Maria go up and down completely randomly.
Pair Corralation between Barloworld and Ave Maria
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 5.35 times more return on investment than Ave Maria. However, Barloworld is 5.35 times more volatile than Ave Maria Growth. It trades about 0.09 of its potential returns per unit of risk. Ave Maria Growth is currently generating about -0.04 per unit of risk. If you would invest 403.00 in Barloworld Ltd ADR on October 26, 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. Ave Maria Growth
Performance |
| Timeline |
| Barloworld ADR |
| Ave Maria Growth |
Barloworld and Ave Maria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Ave Maria
The main advantage of trading using opposite Barloworld and Ave Maria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Ave Maria 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 Ave Maria will offset losses from the drop in Ave Maria's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Ave Maria vs. Ave Maria Value | Ave Maria vs. Ave Maria Rising | Ave Maria vs. Ave Maria Bond | Ave Maria vs. Ave Maria World |
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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