Correlation Between Barloworld and Icon Bond
Can any of the company-specific risk be diversified away by investing in both Barloworld and Icon Bond 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 Bond 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 Bond Fund, you can compare the effects of market volatilities on Barloworld and Icon Bond 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 Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Icon Bond.
Diversification Opportunities for Barloworld and Icon Bond
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Barloworld and Icon is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Icon Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Bond Fund 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 Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Bond Fund has no effect on the direction of Barloworld i.e., Barloworld and Icon Bond go up and down completely randomly.
Pair Corralation between Barloworld and Icon Bond
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 36.07 times more return on investment than Icon Bond. However, Barloworld is 36.07 times more volatile than Icon Bond Fund. It trades about 0.04 of its potential returns per unit of risk. Icon Bond Fund is currently generating about 0.2 per unit of risk. If you would invest 455.00 in Barloworld Ltd ADR on November 27, 2024 and sell it today you would earn a total of 70.00 from holding Barloworld Ltd ADR or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 34.61% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Icon Bond Fund
Performance |
| Timeline |
| Barloworld ADR |
| Icon Bond Fund |
Barloworld and Icon Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Icon Bond
The main advantage of trading using opposite Barloworld and Icon Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Icon Bond 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 Bond will offset losses from the drop in Icon Bond's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Icon Bond vs. Rbc Emerging Markets | Icon Bond vs. Angel Oak Ultrashort | Icon Bond vs. Shelton Emerging Markets | Icon Bond vs. Investec Emerging Markets |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |