Correlation Between Barloworld and Bunzl Plc
Can any of the company-specific risk be diversified away by investing in both Barloworld and Bunzl Plc 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 Bunzl Plc 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 Bunzl plc, you can compare the effects of market volatilities on Barloworld and Bunzl Plc 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 Bunzl Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Bunzl Plc.
Diversification Opportunities for Barloworld and Bunzl Plc
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barloworld and Bunzl is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Bunzl plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunzl plc 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 Bunzl Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunzl plc has no effect on the direction of Barloworld i.e., Barloworld and Bunzl Plc go up and down completely randomly.
Pair Corralation between Barloworld and Bunzl Plc
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 4.1 times more return on investment than Bunzl Plc. However, Barloworld is 4.1 times more volatile than Bunzl plc. It trades about 0.07 of its potential returns per unit of risk. Bunzl plc is currently generating about 0.06 per unit of risk. If you would invest 394.00 in Barloworld Ltd ADR on September 14, 2024 and sell it today you would earn a total of 184.00 from holding Barloworld Ltd ADR or generate 46.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 71.37% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Bunzl plc
Performance |
| Timeline |
| Barloworld ADR |
| Bunzl plc |
Barloworld and Bunzl Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Bunzl Plc
The main advantage of trading using opposite Barloworld and Bunzl Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Bunzl Plc 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 Bunzl Plc will offset losses from the drop in Bunzl Plc's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Bunzl Plc vs. Associated British Foods | Bunzl Plc vs. Compass Group PLC | Bunzl Plc vs. Ashtead Gro | Bunzl Plc vs. Kerry Group PLC |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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