Correlation Between Barloworld and CMG Holdings
Can any of the company-specific risk be diversified away by investing in both Barloworld and CMG Holdings 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 CMG Holdings 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 CMG Holdings Group, you can compare the effects of market volatilities on Barloworld and CMG Holdings 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 CMG Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and CMG Holdings.
Diversification Opportunities for Barloworld and CMG Holdings
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barloworld and CMG is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and CMG Holdings Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMG Holdings 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 CMG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMG Holdings Group has no effect on the direction of Barloworld i.e., Barloworld and CMG Holdings go up and down completely randomly.
Pair Corralation between Barloworld and CMG Holdings
Assuming the 90 days horizon Barloworld is expected to generate 10.42 times less return on investment than CMG Holdings. But when comparing it to its historical volatility, Barloworld Ltd ADR is 3.53 times less risky than CMG Holdings. It trades about 0.02 of its potential returns per unit of risk. CMG Holdings Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.16 in CMG Holdings Group on August 25, 2024 and sell it today you would earn a total of 0.02 from holding CMG Holdings Group or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 65.93% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. CMG Holdings Group
Performance |
| Timeline |
| Barloworld ADR |
| CMG Holdings Group |
Barloworld and CMG Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and CMG Holdings
The main advantage of trading using opposite Barloworld and CMG Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, CMG Holdings 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 CMG Holdings will offset losses from the drop in CMG Holdings' long position.| Barloworld vs. United Rentals | Barloworld vs. Ashtead Gro | Barloworld vs. AerCap Holdings NV | Barloworld vs. Fortress Transp Infra |
| CMG Holdings vs. HUMANA INC | CMG Holdings vs. SCOR PK | CMG Holdings vs. Aquagold International | CMG Holdings vs. Barloworld Ltd ADR |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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