Correlation Between Barloworld and Mfs Technology
Can any of the company-specific risk be diversified away by investing in both Barloworld and Mfs Technology 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 Technology 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 Technology Fund, you can compare the effects of market volatilities on Barloworld and Mfs Technology 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 Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Mfs Technology.
Diversification Opportunities for Barloworld and Mfs Technology
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barloworld and Mfs is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Mfs Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Technology 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 Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Technology has no effect on the direction of Barloworld i.e., Barloworld and Mfs Technology go up and down completely randomly.
Pair Corralation between Barloworld and Mfs Technology
Assuming the 90 days horizon Barloworld Ltd ADR is expected to under-perform the Mfs Technology. In addition to that, Barloworld is 2.39 times more volatile than Mfs Technology Fund. It trades about -0.01 of its total potential returns per unit of risk. Mfs Technology Fund is currently generating about 0.08 per unit of volatility. If you would invest 4,530 in Mfs Technology Fund on September 1, 2024 and sell it today you would earn a total of 654.00 from holding Mfs Technology Fund or generate 14.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Mfs Technology Fund
Performance |
| Timeline |
| Barloworld ADR |
| Mfs Technology |
Barloworld and Mfs Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Mfs Technology
The main advantage of trading using opposite Barloworld and Mfs Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Mfs Technology 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 Technology will offset losses from the drop in Mfs Technology's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Mfs Technology vs. Qs Moderate Growth | Mfs Technology vs. Transamerica Cleartrack Retirement | Mfs Technology vs. Franklin Lifesmart Retirement | Mfs Technology vs. Jp Morgan Smartretirement |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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