Correlation Between Barloworld and DHT Holdings
Can any of the company-specific risk be diversified away by investing in both Barloworld and DHT 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 DHT 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 DHT Holdings, you can compare the effects of market volatilities on Barloworld and DHT 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 DHT Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and DHT Holdings.
Diversification Opportunities for Barloworld and DHT Holdings
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barloworld and DHT is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and DHT Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DHT Holdings 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 DHT Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DHT Holdings has no effect on the direction of Barloworld i.e., Barloworld and DHT Holdings go up and down completely randomly.
Pair Corralation between Barloworld and DHT Holdings
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 2.69 times more return on investment than DHT Holdings. However, Barloworld is 2.69 times more volatile than DHT Holdings. It trades about 0.07 of its potential returns per unit of risk. DHT Holdings is currently generating about -0.07 per unit of risk. If you would invest 403.00 in Barloworld Ltd ADR on August 28, 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. DHT Holdings
Performance |
| Timeline |
| Barloworld ADR |
| DHT Holdings |
Barloworld and DHT Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and DHT Holdings
The main advantage of trading using opposite Barloworld and DHT Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, DHT 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 DHT Holdings will offset losses from the drop in DHT Holdings' long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| DHT Holdings vs. Teekay Tankers | DHT Holdings vs. Frontline | DHT Holdings vs. International Seaways | DHT Holdings vs. Scorpio Tankers |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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