Correlation Between Barloworld and Mainstay Large
Can any of the company-specific risk be diversified away by investing in both Barloworld and Mainstay Large 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 Mainstay Large 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 Mainstay Large Cap, you can compare the effects of market volatilities on Barloworld and Mainstay Large 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 Mainstay Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Mainstay Large.
Diversification Opportunities for Barloworld and Mainstay Large
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barloworld and Mainstay is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Mainstay Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Large Cap 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 Mainstay Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Large Cap has no effect on the direction of Barloworld i.e., Barloworld and Mainstay Large go up and down completely randomly.
Pair Corralation between Barloworld and Mainstay Large
Assuming the 90 days horizon Barloworld Ltd ADR is expected to under-perform the Mainstay Large. In addition to that, Barloworld is 2.67 times more volatile than Mainstay Large Cap. It trades about -0.01 of its total potential returns per unit of risk. Mainstay Large Cap is currently generating about 0.1 per unit of volatility. If you would invest 971.00 in Mainstay Large Cap on September 1, 2024 and sell it today you would earn a total of 154.00 from holding Mainstay Large Cap or generate 15.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.64% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Mainstay Large Cap
Performance |
| Timeline |
| Barloworld ADR |
| Mainstay Large Cap |
Barloworld and Mainstay Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Mainstay Large
The main advantage of trading using opposite Barloworld and Mainstay Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Mainstay Large 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 Mainstay Large will offset losses from the drop in Mainstay Large's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Mainstay Large vs. Mainstay Tax Free | Mainstay Large vs. Mainstay Large Cap | Mainstay Large vs. Mainstay Large Cap | Mainstay Large vs. Mainstay Large Cap |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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