Correlation Between Barloworld and Security Federal
Can any of the company-specific risk be diversified away by investing in both Barloworld and Security Federal 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 Security Federal 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 Security Federal, you can compare the effects of market volatilities on Barloworld and Security Federal 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 Security Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Security Federal.
Diversification Opportunities for Barloworld and Security Federal
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Barloworld and Security is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Security Federal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Security Federal 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 Security Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Security Federal has no effect on the direction of Barloworld i.e., Barloworld and Security Federal go up and down completely randomly.
Pair Corralation between Barloworld and Security Federal
Assuming the 90 days horizon Barloworld is expected to generate 1.64 times less return on investment than Security Federal. In addition to that, Barloworld is 2.37 times more volatile than Security Federal. It trades about 0.02 of its total potential returns per unit of risk. Security Federal is currently generating about 0.06 per unit of volatility. If you would invest 2,331 in Security Federal on September 12, 2024 and sell it today you would earn a total of 469.00 from holding Security Federal or generate 20.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.14% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Security Federal
Performance |
| Timeline |
| Barloworld ADR |
| Security Federal |
Barloworld and Security Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Security Federal
The main advantage of trading using opposite Barloworld and Security Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Security Federal 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 Security Federal will offset losses from the drop in Security Federal's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Security Federal vs. Freedom Bank of | Security Federal vs. HUMANA INC | Security Federal vs. Barloworld Ltd ADR | Security Federal vs. Morningstar Unconstrained Allocation |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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