Correlation Between Barloworld and Pacific Green
Can any of the company-specific risk be diversified away by investing in both Barloworld and Pacific Green 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 Pacific Green 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 Pacific Green Technologies, you can compare the effects of market volatilities on Barloworld and Pacific Green 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 Pacific Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Pacific Green.
Diversification Opportunities for Barloworld and Pacific Green
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barloworld and Pacific is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Pacific Green Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Green Techno 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 Pacific Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Green Techno has no effect on the direction of Barloworld i.e., Barloworld and Pacific Green go up and down completely randomly.
Pair Corralation between Barloworld and Pacific Green
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 1.35 times more return on investment than Pacific Green. However, Barloworld is 1.35 times more volatile than Pacific Green Technologies. It trades about 0.06 of its potential returns per unit of risk. Pacific Green Technologies is currently generating about -0.2 per unit of risk. If you would invest 591.00 in Barloworld Ltd ADR on October 20, 2024 and sell it today you would earn a total of 22.00 from holding Barloworld Ltd ADR or generate 3.72% 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. Pacific Green Technologies
Performance |
| Timeline |
| Barloworld ADR |
| Pacific Green Techno |
Barloworld and Pacific Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Pacific Green
The main advantage of trading using opposite Barloworld and Pacific Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Pacific Green 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 Pacific Green will offset losses from the drop in Pacific Green's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Pacific Green vs. Vow ASA | Pacific Green vs. Eestech | Pacific Green vs. Energy and Water | Pacific Green vs. One World Universe |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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