Correlation Between Barloworld and Mfs Global
Can any of the company-specific risk be diversified away by investing in both Barloworld and Mfs Global 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 Mfs Global 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 Mfs Global Real, you can compare the effects of market volatilities on Barloworld and Mfs Global 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 Mfs Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Mfs Global.
Diversification Opportunities for Barloworld and Mfs Global
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barloworld and Mfs is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Mfs Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Global Real 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 Mfs Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Global Real has no effect on the direction of Barloworld i.e., Barloworld and Mfs Global go up and down completely randomly.
Pair Corralation between Barloworld and Mfs Global
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 10.9 times more return on investment than Mfs Global. However, Barloworld is 10.9 times more volatile than Mfs Global Real. It trades about 0.16 of its potential returns per unit of risk. Mfs Global Real is currently generating about -0.12 per unit of risk. If you would invest 403.00 in Barloworld Ltd ADR on September 13, 2024 and sell it today you would earn a total of 222.00 from holding Barloworld Ltd ADR or generate 55.09% 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. Mfs Global Real
Performance |
| Timeline |
| Barloworld ADR |
| Mfs Global Real |
Barloworld and Mfs Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Mfs Global
The main advantage of trading using opposite Barloworld and Mfs Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Mfs Global 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 Mfs Global will offset losses from the drop in Mfs Global's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Mfs Global vs. Mfs Global Real | Mfs Global vs. Mfs Mid Cap | Mfs Global vs. Mfs International Diversification | Mfs Global vs. Janus Global Real |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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