Correlation Between Barloworld and Gray Television
Can any of the company-specific risk be diversified away by investing in both Barloworld and Gray Television 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 Gray Television 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 Gray Television, you can compare the effects of market volatilities on Barloworld and Gray Television 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 Gray Television. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Gray Television.
Diversification Opportunities for Barloworld and Gray Television
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Barloworld and Gray is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Gray Television in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gray Television 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 Gray Television. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gray Television has no effect on the direction of Barloworld i.e., Barloworld and Gray Television go up and down completely randomly.
Pair Corralation between Barloworld and Gray Television
Assuming the 90 days horizon Barloworld is expected to generate 15.5 times less return on investment than Gray Television. But when comparing it to its historical volatility, Barloworld Ltd ADR is 1.81 times less risky than Gray Television. It trades about 0.0 of its potential returns per unit of risk. Gray Television is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 736.00 in Gray Television on September 2, 2024 and sell it today you would lose (7.00) from holding Gray Television or give up 0.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Gray Television
Performance |
| Timeline |
| Barloworld ADR |
| Gray Television |
Barloworld and Gray Television Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Gray Television
The main advantage of trading using opposite Barloworld and Gray Television positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Gray Television 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 Gray Television will offset losses from the drop in Gray Television's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Gray Television vs. Haverty Furniture Companies | Gray Television vs. Liberty Global PLC | Gray Television vs. Gray Television | Gray Television vs. Greif Inc |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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