Correlation Between Barloworld and Nasdaq-100(r)
Can any of the company-specific risk be diversified away by investing in both Barloworld and Nasdaq-100(r) 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 Nasdaq-100(r) 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 Nasdaq 100 2x Strategy, you can compare the effects of market volatilities on Barloworld and Nasdaq-100(r) 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 Nasdaq-100(r). Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Nasdaq-100(r).
Diversification Opportunities for Barloworld and Nasdaq-100(r)
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barloworld and Nasdaq-100(r) is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Nasdaq 100 2x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 2x 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 Nasdaq-100(r). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 2x has no effect on the direction of Barloworld i.e., Barloworld and Nasdaq-100(r) go up and down completely randomly.
Pair Corralation between Barloworld and Nasdaq-100(r)
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 2.62 times more return on investment than Nasdaq-100(r). However, Barloworld is 2.62 times more volatile than Nasdaq 100 2x Strategy. It trades about 0.04 of its potential returns per unit of risk. Nasdaq 100 2x Strategy is currently generating about 0.09 per unit of risk. If you would invest 459.00 in Barloworld Ltd ADR on November 27, 2024 and sell it today you would earn a total of 66.00 from holding Barloworld Ltd ADR or generate 14.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 34.89% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Nasdaq 100 2x Strategy
Performance |
| Timeline |
| Barloworld ADR |
| Nasdaq 100 2x |
Barloworld and Nasdaq-100(r) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Nasdaq-100(r)
The main advantage of trading using opposite Barloworld and Nasdaq-100(r) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Nasdaq-100(r) 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 Nasdaq-100(r) will offset losses from the drop in Nasdaq-100(r)'s long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Nasdaq-100(r) vs. Sp 500 2x | Nasdaq-100(r) vs. Inverse Nasdaq 100 2x | Nasdaq-100(r) vs. Inverse Sp 500 | Nasdaq-100(r) vs. Ultra Nasdaq 100 Profunds |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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