Correlation Between Barloworld and Cullen International
Can any of the company-specific risk be diversified away by investing in both Barloworld and Cullen International 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 Cullen International 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 Cullen International High, you can compare the effects of market volatilities on Barloworld and Cullen International 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 Cullen International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Cullen International.
Diversification Opportunities for Barloworld and Cullen International
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barloworld and Cullen is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Cullen International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullen International High 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 Cullen International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cullen International High has no effect on the direction of Barloworld i.e., Barloworld and Cullen International go up and down completely randomly.
Pair Corralation between Barloworld and Cullen International
Assuming the 90 days horizon Barloworld Ltd ADR is expected to under-perform the Cullen International. In addition to that, Barloworld is 4.17 times more volatile than Cullen International High. It trades about -0.14 of its total potential returns per unit of risk. Cullen International High is currently generating about 0.29 per unit of volatility. If you would invest 1,090 in Cullen International High on November 28, 2024 and sell it today you would earn a total of 47.00 from holding Cullen International High or generate 4.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Cullen International High
Performance |
| Timeline |
| Barloworld ADR |
| Cullen International High |
Barloworld and Cullen International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Cullen International
The main advantage of trading using opposite Barloworld and Cullen International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Cullen International 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 Cullen International will offset losses from the drop in Cullen International's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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