Correlation Between Barloworld and Federated Emerging
Can any of the company-specific risk be diversified away by investing in both Barloworld and Federated Emerging 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 Federated Emerging 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 Federated Emerging Market, you can compare the effects of market volatilities on Barloworld and Federated Emerging 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 Federated Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Federated Emerging.
Diversification Opportunities for Barloworld and Federated Emerging
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barloworld and Federated is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Federated Emerging Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Emerging Market 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 Federated Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Emerging Market has no effect on the direction of Barloworld i.e., Barloworld and Federated Emerging go up and down completely randomly.
Pair Corralation between Barloworld and Federated Emerging
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 15.94 times more return on investment than Federated Emerging. However, Barloworld is 15.94 times more volatile than Federated Emerging Market. It trades about 0.02 of its potential returns per unit of risk. Federated Emerging Market is currently generating about 0.1 per unit of risk. If you would invest 510.00 in Barloworld Ltd ADR on September 1, 2024 and sell it today you would lose (87.00) from holding Barloworld Ltd ADR or give up 17.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 68.86% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Federated Emerging Market
Performance |
| Timeline |
| Barloworld ADR |
| Federated Emerging Market |
Barloworld and Federated Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Federated Emerging
The main advantage of trading using opposite Barloworld and Federated Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Federated Emerging 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 Federated Emerging will offset losses from the drop in Federated Emerging's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Federated Emerging vs. Fidelity Advisor Financial | Federated Emerging vs. 1919 Financial Services | Federated Emerging vs. Mesirow Financial Small | Federated Emerging vs. John Hancock Financial |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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