Correlation Between Barloworld and California High-yield
Can any of the company-specific risk be diversified away by investing in both Barloworld and California High-yield 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 California High-yield 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 California High Yield Municipal, you can compare the effects of market volatilities on Barloworld and California High-yield 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 California High-yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and California High-yield.
Diversification Opportunities for Barloworld and California High-yield
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barloworld and California is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and California High Yield Municipa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California High Yield 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 California High-yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California High Yield has no effect on the direction of Barloworld i.e., Barloworld and California High-yield go up and down completely randomly.
Pair Corralation between Barloworld and California High-yield
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 17.06 times more return on investment than California High-yield. However, Barloworld is 17.06 times more volatile than California High Yield Municipal. It trades about 0.04 of its potential returns per unit of risk. California High Yield Municipal is currently generating about 0.14 per unit of risk. If you would invest 365.00 in Barloworld Ltd ADR on August 24, 2024 and sell it today you would earn a total of 58.00 from holding Barloworld Ltd ADR or generate 15.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 67.6% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. California High Yield Municipa
Performance |
| Timeline |
| Barloworld ADR |
| California High Yield |
Barloworld and California High-yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and California High-yield
The main advantage of trading using opposite Barloworld and California High-yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, California High-yield 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 California High-yield will offset losses from the drop in California High-yield's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| California High-yield vs. Vanguard California Long Term | California High-yield vs. HUMANA INC | California High-yield vs. Aquagold International | California High-yield 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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