Correlation Between Barloworld and Great West
Can any of the company-specific risk be diversified away by investing in both Barloworld and Great West 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 Great West 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 Great West Lifetime 2030, you can compare the effects of market volatilities on Barloworld and Great West 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 Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Great West.
Diversification Opportunities for Barloworld and Great West
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barloworld and Great is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Great West Lifetime 2030 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Lifetime 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 Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Lifetime has no effect on the direction of Barloworld i.e., Barloworld and Great West go up and down completely randomly.
Pair Corralation between Barloworld and Great West
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 12.52 times more return on investment than Great West. However, Barloworld is 12.52 times more volatile than Great West Lifetime 2030. It trades about 0.04 of its potential returns per unit of risk. Great West Lifetime 2030 is currently generating about 0.06 per unit of risk. If you would invest 347.00 in Barloworld Ltd ADR on September 12, 2024 and sell it today you would earn a total of 76.00 from holding Barloworld Ltd ADR or generate 21.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 71.46% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Great West Lifetime 2030
Performance |
| Timeline |
| Barloworld ADR |
| Great West Lifetime |
Barloworld and Great West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Great West
The main advantage of trading using opposite Barloworld and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Great West 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 Great West will offset losses from the drop in Great West's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Great West vs. Vanguard Target Retirement | Great West vs. Fidelity Freedom 2030 | Great West vs. HUMANA INC | Great West vs. Barloworld Ltd ADR |
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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