Correlation Between Barloworld and Champlain Small
Can any of the company-specific risk be diversified away by investing in both Barloworld and Champlain Small 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 Champlain Small 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 Champlain Small Pany, you can compare the effects of market volatilities on Barloworld and Champlain Small 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 Champlain Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Champlain Small.
Diversification Opportunities for Barloworld and Champlain Small
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barloworld and CHAMPLAIN is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Champlain Small Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champlain Small Pany 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 Champlain Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champlain Small Pany has no effect on the direction of Barloworld i.e., Barloworld and Champlain Small go up and down completely randomly.
Pair Corralation between Barloworld and Champlain Small
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 5.67 times more return on investment than Champlain Small. However, Barloworld is 5.67 times more volatile than Champlain Small Pany. It trades about 0.03 of its potential returns per unit of risk. Champlain Small Pany is currently generating about 0.01 per unit of risk. If you would invest 510.00 in Barloworld Ltd ADR on October 25, 2024 and sell it today you would earn a total of 16.00 from holding Barloworld Ltd ADR or generate 3.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 71.26% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Champlain Small Pany
Performance |
| Timeline |
| Barloworld ADR |
| Champlain Small Pany |
Barloworld and Champlain Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Champlain Small
The main advantage of trading using opposite Barloworld and Champlain Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Champlain Small 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 Champlain Small will offset losses from the drop in Champlain Small's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Champlain Small vs. Champlain Mid Cap | Champlain Small vs. Aberdeen Select International | Champlain Small vs. Marsico 21st Century | Champlain Small vs. Diamond Hill Large |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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