Correlation Between Barloworld and Costamare
Can any of the company-specific risk be diversified away by investing in both Barloworld and Costamare 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 Costamare 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 Costamare, you can compare the effects of market volatilities on Barloworld and Costamare 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 Costamare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Costamare.
Diversification Opportunities for Barloworld and Costamare
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barloworld and Costamare is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Costamare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costamare 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 Costamare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costamare has no effect on the direction of Barloworld i.e., Barloworld and Costamare go up and down completely randomly.
Pair Corralation between Barloworld and Costamare
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 6.15 times more return on investment than Costamare. However, Barloworld is 6.15 times more volatile than Costamare. It trades about 0.07 of its potential returns per unit of risk. Costamare is currently generating about -0.22 per unit of risk. If you would invest 403.00 in Barloworld Ltd ADR on August 29, 2024 and sell it today you would earn a total of 20.00 from holding Barloworld Ltd ADR or generate 4.96% 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. Costamare
Performance |
| Timeline |
| Barloworld ADR |
| Costamare |
Barloworld and Costamare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Costamare
The main advantage of trading using opposite Barloworld and Costamare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Costamare 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 Costamare will offset losses from the drop in Costamare's long position.| Barloworld vs. United Rentals | Barloworld vs. AerCap Holdings NV | Barloworld vs. Fortress Transp Infra | Barloworld vs. U Haul Holding |
| Costamare vs. Safe Bulkers | Costamare vs. Safe Bulkers | Costamare vs. Diana Shipping | Costamare vs. Global Ship Lease |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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