Correlation Between Barloworld and Franklin Natural
Can any of the company-specific risk be diversified away by investing in both Barloworld and Franklin Natural 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 Franklin Natural 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 Franklin Natural Resources, you can compare the effects of market volatilities on Barloworld and Franklin Natural 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 Franklin Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Franklin Natural.
Diversification Opportunities for Barloworld and Franklin Natural
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barloworld and Franklin is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Franklin Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Natural Res 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 Franklin Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Natural Res has no effect on the direction of Barloworld i.e., Barloworld and Franklin Natural go up and down completely randomly.
Pair Corralation between Barloworld and Franklin Natural
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 3.91 times more return on investment than Franklin Natural. However, Barloworld is 3.91 times more volatile than Franklin Natural Resources. It trades about 0.02 of its potential returns per unit of risk. Franklin Natural Resources is currently generating about 0.05 per unit of risk. If you would invest 410.00 in Barloworld Ltd ADR on September 1, 2024 and sell it today you would earn a total of 13.00 from holding Barloworld Ltd ADR or generate 3.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 67.29% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Franklin Natural Resources
Performance |
| Timeline |
| Barloworld ADR |
| Franklin Natural Res |
Barloworld and Franklin Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Franklin Natural
The main advantage of trading using opposite Barloworld and Franklin Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Franklin Natural 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 Franklin Natural will offset losses from the drop in Franklin Natural's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Franklin Natural vs. Lord Abbett Small | Franklin Natural vs. Great West Loomis Sayles | Franklin Natural vs. Amg River Road | Franklin Natural vs. Heartland Value Plus |
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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