Correlation Between Barloworld and ENB Financial
Can any of the company-specific risk be diversified away by investing in both Barloworld and ENB Financial 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 ENB Financial 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 ENB Financial Corp, you can compare the effects of market volatilities on Barloworld and ENB Financial 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 ENB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and ENB Financial.
Diversification Opportunities for Barloworld and ENB Financial
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Barloworld and ENB is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and ENB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENB Financial Corp 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 ENB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENB Financial Corp has no effect on the direction of Barloworld i.e., Barloworld and ENB Financial go up and down completely randomly.
Pair Corralation between Barloworld and ENB Financial
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 2.02 times more return on investment than ENB Financial. However, Barloworld is 2.02 times more volatile than ENB Financial Corp. It trades about 0.21 of its potential returns per unit of risk. ENB Financial Corp is currently generating about 0.05 per unit of risk. If you would invest 423.00 in Barloworld Ltd ADR on September 13, 2024 and sell it today you would earn a total of 155.00 from holding Barloworld Ltd ADR or generate 36.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. ENB Financial Corp
Performance |
| Timeline |
| Barloworld ADR |
| ENB Financial Corp |
Barloworld and ENB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and ENB Financial
The main advantage of trading using opposite Barloworld and ENB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, ENB Financial 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 ENB Financial will offset losses from the drop in ENB Financial's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| ENB Financial vs. Potomac Bancshares | ENB Financial vs. Apollo Bancorp | ENB Financial vs. The Farmers Bank | ENB Financial vs. 1ST SUMMIT BANCORP |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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