Correlation Between Barloworld and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Barloworld and Goldman Sachs 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 Goldman Sachs 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 Goldman Sachs Absolute, you can compare the effects of market volatilities on Barloworld and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Goldman Sachs.
Diversification Opportunities for Barloworld and Goldman Sachs
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barloworld and Goldman is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Goldman Sachs Absolute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Absolute 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Absolute has no effect on the direction of Barloworld i.e., Barloworld and Goldman Sachs go up and down completely randomly.
Pair Corralation between Barloworld and Goldman Sachs
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 13.62 times more return on investment than Goldman Sachs. However, Barloworld is 13.62 times more volatile than Goldman Sachs Absolute. It trades about 0.02 of its potential returns per unit of risk. Goldman Sachs Absolute is currently generating about 0.1 per unit of risk. If you would invest 436.00 in Barloworld Ltd ADR on September 1, 2024 and sell it today you would lose (13.00) from holding Barloworld Ltd ADR or give up 2.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 62.1% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Goldman Sachs Absolute
Performance |
| Timeline |
| Barloworld ADR |
| Goldman Sachs Absolute |
Barloworld and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Goldman Sachs
The main advantage of trading using opposite Barloworld and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Goldman Sachs vs. Mfs International Diversification | Goldman Sachs vs. HUMANA INC | Goldman Sachs vs. Aquagold International | Goldman Sachs 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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