Correlation Between Barloworld and Investec
Can any of the company-specific risk be diversified away by investing in both Barloworld and Investec 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 Investec 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 Investec Group, you can compare the effects of market volatilities on Barloworld and Investec 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 Investec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Investec.
Diversification Opportunities for Barloworld and Investec
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barloworld and Investec is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Investec Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investec Group 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 Investec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investec Group has no effect on the direction of Barloworld i.e., Barloworld and Investec go up and down completely randomly.
Pair Corralation between Barloworld and Investec
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 9.47 times more return on investment than Investec. However, Barloworld is 9.47 times more volatile than Investec Group. It trades about 0.23 of its potential returns per unit of risk. Investec Group is currently generating about 0.21 per unit of risk. If you would invest 423.00 in Barloworld Ltd ADR on September 20, 2024 and sell it today you would earn a total of 167.00 from holding Barloworld Ltd ADR or generate 39.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Investec Group
Performance |
| Timeline |
| Barloworld ADR |
| Investec Group |
Barloworld and Investec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Investec
The main advantage of trading using opposite Barloworld and Investec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Investec 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 Investec will offset losses from the drop in Investec's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Investec vs. SPENN Technology AS | Investec vs. OFX Group Ltd | Investec vs. HUMANA INC | Investec vs. Barloworld Ltd ADR |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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