Correlation Between Barloworld and Growth Fund
Can any of the company-specific risk be diversified away by investing in both Barloworld and Growth Fund 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 Growth Fund 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 Growth Fund Of, you can compare the effects of market volatilities on Barloworld and Growth Fund 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 Growth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Growth Fund.
Diversification Opportunities for Barloworld and Growth Fund
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barloworld and Growth is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Growth Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund 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 Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund has no effect on the direction of Barloworld i.e., Barloworld and Growth Fund go up and down completely randomly.
Pair Corralation between Barloworld and Growth Fund
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 6.78 times more return on investment than Growth Fund. However, Barloworld is 6.78 times more volatile than Growth Fund Of. It trades about 0.07 of its potential returns per unit of risk. Growth Fund Of is currently generating about 0.37 per unit of risk. If you would invest 403.00 in Barloworld Ltd ADR on September 1, 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Growth Fund Of
Performance |
| Timeline |
| Barloworld ADR |
| Growth Fund |
Barloworld and Growth Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Growth Fund
The main advantage of trading using opposite Barloworld and Growth Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Growth Fund 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 Growth Fund will offset losses from the drop in Growth Fund's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Growth Fund vs. Europacific Growth Fund | Growth Fund vs. Capital World Growth | Growth Fund vs. American Funds Fundamental | Growth Fund vs. Washington Mutual Investors |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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