Correlation Between Barloworld and Fidus Investment
Can any of the company-specific risk be diversified away by investing in both Barloworld and Fidus Investment 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 Fidus Investment 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 Fidus Investment Corp, you can compare the effects of market volatilities on Barloworld and Fidus Investment 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 Fidus Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Fidus Investment.
Diversification Opportunities for Barloworld and Fidus Investment
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Barloworld and Fidus is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Fidus Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidus Investment 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 Fidus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidus Investment Corp has no effect on the direction of Barloworld i.e., Barloworld and Fidus Investment go up and down completely randomly.
Pair Corralation between Barloworld and Fidus Investment
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 6.74 times more return on investment than Fidus Investment. However, Barloworld is 6.74 times more volatile than Fidus Investment Corp. It trades about 0.07 of its potential returns per unit of risk. Fidus Investment Corp is currently generating about 0.38 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 Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Fidus Investment Corp
Performance |
| Timeline |
| Barloworld ADR |
| Fidus Investment Corp |
Barloworld and Fidus Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Fidus Investment
The main advantage of trading using opposite Barloworld and Fidus Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Fidus Investment 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 Fidus Investment will offset losses from the drop in Fidus Investment's long position.| Barloworld vs. United Rentals | Barloworld vs. AerCap Holdings NV | Barloworld vs. Fortress Transp Infra | Barloworld vs. U Haul Holding |
| Fidus Investment vs. Aurora Innovation | Fidus Investment vs. HUMANA INC | Fidus Investment vs. Aquagold International | Fidus Investment 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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