Correlation Between Barloworld and US Global
Can any of the company-specific risk be diversified away by investing in both Barloworld and US Global 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 US Global 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 US Global Investors, you can compare the effects of market volatilities on Barloworld and US Global 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 US Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and US Global.
Diversification Opportunities for Barloworld and US Global
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Barloworld and GROW is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and US Global Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Global Investors 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 US Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Global Investors has no effect on the direction of Barloworld i.e., Barloworld and US Global go up and down completely randomly.
Pair Corralation between Barloworld and US Global
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 3.61 times more return on investment than US Global. However, Barloworld is 3.61 times more volatile than US Global Investors. It trades about 0.07 of its potential returns per unit of risk. US Global Investors is currently generating about 0.01 per unit of risk. If you would invest 403.00 in Barloworld Ltd ADR on August 28, 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. US Global Investors
Performance |
| Timeline |
| Barloworld ADR |
| US Global Investors |
Barloworld and US Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and US Global
The main advantage of trading using opposite Barloworld and US Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, US Global 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 US Global will offset losses from the drop in US Global's long position.| Barloworld vs. United Rentals | Barloworld vs. AerCap Holdings NV | Barloworld vs. Fortress Transp Infra | Barloworld vs. U Haul Holding |
| US Global vs. Aurora Innovation | US Global vs. HUMANA INC | US Global vs. Aquagold International | US Global 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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