Correlation Between Barloworld and IX Acquisition
Can any of the company-specific risk be diversified away by investing in both Barloworld and IX Acquisition 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 IX Acquisition 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 IX Acquisition Corp, you can compare the effects of market volatilities on Barloworld and IX Acquisition 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 IX Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and IX Acquisition.
Diversification Opportunities for Barloworld and IX Acquisition
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barloworld and IXAQ is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and IX Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IX Acquisition Corp 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 IX Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IX Acquisition Corp has no effect on the direction of Barloworld i.e., Barloworld and IX Acquisition go up and down completely randomly.
Pair Corralation between Barloworld and IX Acquisition
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 64.89 times more return on investment than IX Acquisition. However, Barloworld is 64.89 times more volatile than IX Acquisition Corp. It trades about 0.06 of its potential returns per unit of risk. IX Acquisition Corp is currently generating about 0.26 per unit of risk. If you would invest 590.00 in Barloworld Ltd ADR on October 21, 2024 and sell it today you would earn a total of 23.00 from holding Barloworld Ltd ADR or generate 3.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. IX Acquisition Corp
Performance |
| Timeline |
| Barloworld ADR |
| IX Acquisition Corp |
Barloworld and IX Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and IX Acquisition
The main advantage of trading using opposite Barloworld and IX Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, IX Acquisition 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 IX Acquisition will offset losses from the drop in IX Acquisition's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
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 CEOs Directory module to screen CEOs from public companies around the world.
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