Correlation Between Barloworld and Bellevue Life
Can any of the company-specific risk be diversified away by investing in both Barloworld and Bellevue Life 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 Bellevue Life 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 Bellevue Life Sciences, you can compare the effects of market volatilities on Barloworld and Bellevue Life 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 Bellevue Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Bellevue Life.
Diversification Opportunities for Barloworld and Bellevue Life
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Barloworld and Bellevue is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Bellevue Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bellevue Life Sciences 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 Bellevue Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bellevue Life Sciences has no effect on the direction of Barloworld i.e., Barloworld and Bellevue Life go up and down completely randomly.
Pair Corralation between Barloworld and Bellevue Life
Assuming the 90 days horizon Barloworld is expected to generate 13.67 times less return on investment than Bellevue Life. But when comparing it to its historical volatility, Barloworld Ltd ADR is 5.43 times less risky than Bellevue Life. It trades about 0.06 of its potential returns per unit of risk. Bellevue Life Sciences is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 3.13 in Bellevue Life Sciences on September 13, 2024 and sell it today you would earn a total of 1.37 from holding Bellevue Life Sciences or generate 43.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 23.77% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Bellevue Life Sciences
Performance |
| Timeline |
| Barloworld ADR |
| Bellevue Life Sciences |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Barloworld and Bellevue Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Bellevue Life
The main advantage of trading using opposite Barloworld and Bellevue Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Bellevue Life 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 Bellevue Life will offset losses from the drop in Bellevue Life's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Bellevue Life vs. Visa Class A | Bellevue Life vs. Diamond Hill Investment | Bellevue Life vs. Distoken Acquisition | Bellevue Life vs. AllianceBernstein Holding LP |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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