Correlation Between Barloworld and Close Brothers
Can any of the company-specific risk be diversified away by investing in both Barloworld and Close Brothers 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 Close Brothers 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 Close Brothers Group, you can compare the effects of market volatilities on Barloworld and Close Brothers 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 Close Brothers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Close Brothers.
Diversification Opportunities for Barloworld and Close Brothers
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Barloworld and Close is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Close Brothers Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Close Brothers Group 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 Close Brothers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Close Brothers Group has no effect on the direction of Barloworld i.e., Barloworld and Close Brothers go up and down completely randomly.
Pair Corralation between Barloworld and Close Brothers
Assuming the 90 days horizon Barloworld Ltd ADR is expected to under-perform the Close Brothers. But the pink sheet apears to be less risky and, when comparing its historical volatility, Barloworld Ltd ADR is 1.72 times less risky than Close Brothers. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Close Brothers Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 779.00 in Close Brothers Group on December 4, 2024 and sell it today you would earn a total of 60.00 from holding Close Brothers Group or generate 7.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Close Brothers Group
Performance |
| Timeline |
| Barloworld ADR |
| Close Brothers Group |
Barloworld and Close Brothers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Close Brothers
The main advantage of trading using opposite Barloworld and Close Brothers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Close Brothers 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 Close Brothers will offset losses from the drop in Close Brothers' long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Close Brothers vs. Peoples Bancorp | Close Brothers vs. Primis Financial Corp | Close Brothers vs. ConnectOne Bancorp | Close Brothers vs. LINKBANCORP |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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