Correlation Between Barloworld and Nicholas Fund
Can any of the company-specific risk be diversified away by investing in both Barloworld and Nicholas Fund 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 Nicholas Fund 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 Nicholas Fund Inc, you can compare the effects of market volatilities on Barloworld and Nicholas Fund 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 Nicholas Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Nicholas Fund.
Diversification Opportunities for Barloworld and Nicholas Fund
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barloworld and Nicholas is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Nicholas Fund Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicholas Fund 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 Nicholas Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicholas Fund has no effect on the direction of Barloworld i.e., Barloworld and Nicholas Fund go up and down completely randomly.
Pair Corralation between Barloworld and Nicholas Fund
Assuming the 90 days horizon Barloworld Ltd ADR is expected to under-perform the Nicholas Fund. In addition to that, Barloworld is 3.83 times more volatile than Nicholas Fund Inc. It trades about -0.01 of its total potential returns per unit of risk. Nicholas Fund Inc is currently generating about 0.09 per unit of volatility. If you would invest 9,217 in Nicholas Fund Inc on September 1, 2024 and sell it today you would earn a total of 919.00 from holding Nicholas Fund Inc or generate 9.97% 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. Nicholas Fund Inc
Performance |
| Timeline |
| Barloworld ADR |
| Nicholas Fund |
Barloworld and Nicholas Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Nicholas Fund
The main advantage of trading using opposite Barloworld and Nicholas Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Nicholas Fund 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 Nicholas Fund will offset losses from the drop in Nicholas Fund's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Nicholas Fund vs. Nicholas Equity Income | Nicholas Fund vs. Nicholas Ltd Edition | Nicholas Fund vs. Nicholas Ii Inc | Nicholas Fund vs. Mobile Telecommunications Ultrasector |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |