Correlation Between Barloworld and Catalyst/smh High
Can any of the company-specific risk be diversified away by investing in both Barloworld and Catalyst/smh High 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 Catalyst/smh High 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 Catalystsmh High Income, you can compare the effects of market volatilities on Barloworld and Catalyst/smh High 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 Catalyst/smh High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Catalyst/smh High.
Diversification Opportunities for Barloworld and Catalyst/smh High
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barloworld and Catalyst/smh is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Catalystsmh High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalystsmh High Income 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 Catalyst/smh High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalystsmh High Income has no effect on the direction of Barloworld i.e., Barloworld and Catalyst/smh High go up and down completely randomly.
Pair Corralation between Barloworld and Catalyst/smh High
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 21.75 times more return on investment than Catalyst/smh High. However, Barloworld is 21.75 times more volatile than Catalystsmh High Income. It trades about 0.07 of its potential returns per unit of risk. Catalystsmh High Income 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 | 95.45% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Catalystsmh High Income
Performance |
| Timeline |
| Barloworld ADR |
| Catalystsmh High Income |
Barloworld and Catalyst/smh High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Catalyst/smh High
The main advantage of trading using opposite Barloworld and Catalyst/smh High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Catalyst/smh High 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 Catalyst/smh High will offset losses from the drop in Catalyst/smh High's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Catalyst/smh High vs. Catalystsmh High Income | Catalyst/smh High vs. Catalystsmh High Income | Catalyst/smh High vs. Catalyst Mlp Infrastructure | Catalyst/smh High vs. Catalyst Mlp Infrastructure |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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