Correlation Between Barloworld and Papaya Growth
Can any of the company-specific risk be diversified away by investing in both Barloworld and Papaya Growth 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 Papaya Growth 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 Papaya Growth Opportunity, you can compare the effects of market volatilities on Barloworld and Papaya Growth 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 Papaya Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Papaya Growth.
Diversification Opportunities for Barloworld and Papaya Growth
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Barloworld and Papaya is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Papaya Growth Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Papaya Growth Opportunity 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 Papaya Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Papaya Growth Opportunity has no effect on the direction of Barloworld i.e., Barloworld and Papaya Growth go up and down completely randomly.
Pair Corralation between Barloworld and Papaya Growth
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 6.15 times more return on investment than Papaya Growth. However, Barloworld is 6.15 times more volatile than Papaya Growth Opportunity. It trades about 0.0 of its potential returns per unit of risk. Papaya Growth Opportunity is currently generating about -0.08 per unit of risk. If you would invest 443.00 in Barloworld Ltd ADR on August 28, 2024 and sell it today you would lose (20.00) from holding Barloworld Ltd ADR or give up 4.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Papaya Growth Opportunity
Performance |
| Timeline |
| Barloworld ADR |
| Papaya Growth Opportunity |
Barloworld and Papaya Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Papaya Growth
The main advantage of trading using opposite Barloworld and Papaya Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Papaya Growth 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 Papaya Growth will offset losses from the drop in Papaya Growth's long position.| Barloworld vs. United Rentals | Barloworld vs. AerCap Holdings NV | Barloworld vs. Fortress Transp Infra | Barloworld vs. U Haul Holding |
| Papaya Growth vs. Aurora Innovation | Papaya Growth vs. HUMANA INC | Papaya Growth vs. Aquagold International | Papaya Growth 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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