Correlation Between Barloworld and Simt Large
Can any of the company-specific risk be diversified away by investing in both Barloworld and Simt Large 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 Simt Large 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 Simt Large Cap, you can compare the effects of market volatilities on Barloworld and Simt Large 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 Simt Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Simt Large.
Diversification Opportunities for Barloworld and Simt Large
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barloworld and Simt is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Simt Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Large Cap 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 Simt Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Large Cap has no effect on the direction of Barloworld i.e., Barloworld and Simt Large go up and down completely randomly.
Pair Corralation between Barloworld and Simt Large
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 4.18 times more return on investment than Simt Large. However, Barloworld is 4.18 times more volatile than Simt Large Cap. It trades about 0.06 of its potential returns per unit of risk. Simt Large Cap is currently generating about 0.11 per unit of risk. If you would invest 334.00 in Barloworld Ltd ADR on September 1, 2024 and sell it today you would earn a total of 89.00 from holding Barloworld Ltd ADR or generate 26.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 75.13% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Simt Large Cap
Performance |
| Timeline |
| Barloworld ADR |
| Simt Large Cap |
Barloworld and Simt Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Simt Large
The main advantage of trading using opposite Barloworld and Simt Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Simt Large 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 Simt Large will offset losses from the drop in Simt Large's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Simt Large vs. Federated Institutional High | Simt Large vs. Metropolitan West High | Simt Large vs. Fidelity Capital Income | Simt Large vs. Western Asset High |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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