Correlation Between Barloworld and GP Act
Can any of the company-specific risk be diversified away by investing in both Barloworld and GP Act 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 GP Act 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 GP Act III Acquisition, you can compare the effects of market volatilities on Barloworld and GP Act 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 GP Act. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and GP Act.
Diversification Opportunities for Barloworld and GP Act
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Barloworld and GPAT is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and GP Act III Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GP Act III 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 GP Act. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GP Act III has no effect on the direction of Barloworld i.e., Barloworld and GP Act go up and down completely randomly.
Pair Corralation between Barloworld and GP Act
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 59.89 times more return on investment than GP Act. However, Barloworld is 59.89 times more volatile than GP Act III Acquisition. It trades about 0.05 of its potential returns per unit of risk. GP Act III Acquisition is currently generating about 0.11 per unit of risk. If you would invest 354.00 in Barloworld Ltd ADR on September 13, 2024 and sell it today you would earn a total of 224.00 from holding Barloworld Ltd ADR or generate 63.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 32.49% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. GP Act III Acquisition
Performance |
| Timeline |
| Barloworld ADR |
| GP Act III |
Barloworld and GP Act Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and GP Act
The main advantage of trading using opposite Barloworld and GP Act positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, GP Act 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 GP Act will offset losses from the drop in GP Act's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| GP Act vs. Visa Class A | GP Act vs. Diamond Hill Investment | GP Act vs. Distoken Acquisition | GP Act vs. AllianceBernstein Holding LP |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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