Correlation Between Barloworld and Icon Financial
Can any of the company-specific risk be diversified away by investing in both Barloworld and Icon Financial 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 Icon Financial 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 Icon Financial Fund, you can compare the effects of market volatilities on Barloworld and Icon Financial 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 Icon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Icon Financial.
Diversification Opportunities for Barloworld and Icon Financial
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barloworld and Icon is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Icon Financial Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Financial 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 Icon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Financial has no effect on the direction of Barloworld i.e., Barloworld and Icon Financial go up and down completely randomly.
Pair Corralation between Barloworld and Icon Financial
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 2.01 times more return on investment than Icon Financial. However, Barloworld is 2.01 times more volatile than Icon Financial Fund. It trades about -0.01 of its potential returns per unit of risk. Icon Financial Fund is currently generating about -0.03 per unit of risk. If you would invest 465.00 in Barloworld Ltd ADR on September 1, 2024 and sell it today you would lose (42.00) from holding Barloworld Ltd ADR or give up 9.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Icon Financial Fund
Performance |
| Timeline |
| Barloworld ADR |
| Icon Financial |
Barloworld and Icon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Icon Financial
The main advantage of trading using opposite Barloworld and Icon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Icon Financial 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 Icon Financial will offset losses from the drop in Icon Financial's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Icon Financial vs. Nuveen Minnesota Municipal | Icon Financial vs. Bbh Intermediate Municipal | Icon Financial vs. Blrc Sgy Mnp | Icon Financial vs. T Rowe Price |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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