Correlation Between Barloworld and Kensington Active
Can any of the company-specific risk be diversified away by investing in both Barloworld and Kensington Active 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 Kensington Active 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 Kensington Active Advantage, you can compare the effects of market volatilities on Barloworld and Kensington Active 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 Kensington Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Kensington Active.
Diversification Opportunities for Barloworld and Kensington Active
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barloworld and Kensington is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Kensington Active Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kensington Active 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 Kensington Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kensington Active has no effect on the direction of Barloworld i.e., Barloworld and Kensington Active go up and down completely randomly.
Pair Corralation between Barloworld and Kensington Active
Assuming the 90 days horizon Barloworld Ltd ADR is expected to under-perform the Kensington Active. In addition to that, Barloworld is 6.62 times more volatile than Kensington Active Advantage. It trades about -0.14 of its total potential returns per unit of risk. Kensington Active Advantage is currently generating about -0.02 per unit of volatility. If you would invest 1,017 in Kensington Active Advantage on November 28, 2024 and sell it today you would lose (2.00) from holding Kensington Active Advantage or give up 0.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Kensington Active Advantage
Performance |
| Timeline |
| Barloworld ADR |
| Kensington Active |
Barloworld and Kensington Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Kensington Active
The main advantage of trading using opposite Barloworld and Kensington Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Kensington Active 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 Kensington Active will offset losses from the drop in Kensington Active's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Kensington Active vs. T Rowe Price | Kensington Active vs. Ultrasmall Cap Profund Ultrasmall Cap | Kensington Active vs. T Rowe Price | Kensington Active vs. Allianzgi Small Cap Blend |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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