Correlation Between Barloworld and State Street
Can any of the company-specific risk be diversified away by investing in both Barloworld and State Street 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 State Street 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 State Street Target, you can compare the effects of market volatilities on Barloworld and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and State Street.
Diversification Opportunities for Barloworld and State Street
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barloworld and State is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and State Street Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Target 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Target has no effect on the direction of Barloworld i.e., Barloworld and State Street go up and down completely randomly.
Pair Corralation between Barloworld and State Street
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 46.48 times more return on investment than State Street. However, Barloworld is 46.48 times more volatile than State Street Target. It trades about 0.22 of its potential returns per unit of risk. State Street Target is currently generating about 0.24 per unit of risk. If you would invest 423.00 in Barloworld Ltd ADR on September 13, 2024 and sell it today you would earn a total of 202.00 from holding Barloworld Ltd ADR or generate 47.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. State Street Target
Performance |
| Timeline |
| Barloworld ADR |
| State Street Target |
Barloworld and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and State Street
The main advantage of trading using opposite Barloworld and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| State Street vs. Science Technology Fund | State Street vs. Red Oak Technology | State Street vs. Icon Information Technology | State Street vs. Hennessy Technology 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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