Correlation Between Barloworld and Energy Services
Can any of the company-specific risk be diversified away by investing in both Barloworld and Energy Services 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 Energy Services 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 Energy Services Fund, you can compare the effects of market volatilities on Barloworld and Energy Services 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 Energy Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Energy Services.
Diversification Opportunities for Barloworld and Energy Services
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Barloworld and ENERGY is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Energy Services Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Services 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 Energy Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Services has no effect on the direction of Barloworld i.e., Barloworld and Energy Services go up and down completely randomly.
Pair Corralation between Barloworld and Energy Services
Assuming the 90 days horizon Barloworld is expected to generate 1.35 times less return on investment than Energy Services. In addition to that, Barloworld is 2.46 times more volatile than Energy Services Fund. It trades about 0.07 of its total potential returns per unit of risk. Energy Services Fund is currently generating about 0.22 per unit of volatility. If you would invest 22,166 in Energy Services Fund on September 1, 2024 and sell it today you would earn a total of 2,461 from holding Energy Services Fund or generate 11.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Energy Services Fund
Performance |
| Timeline |
| Barloworld ADR |
| Energy Services |
Barloworld and Energy Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Energy Services
The main advantage of trading using opposite Barloworld and Energy Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Energy Services 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 Energy Services will offset losses from the drop in Energy Services' long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Energy Services vs. Basic Materials Fund | Energy Services vs. Electronics Fund Investor | Energy Services vs. Health Care Fund | Energy Services vs. Precious Metals Fund |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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