Correlation Between Barloworld and Growth Opportunities
Can any of the company-specific risk be diversified away by investing in both Barloworld and Growth Opportunities 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 Growth Opportunities 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 Growth Opportunities Fund, you can compare the effects of market volatilities on Barloworld and Growth Opportunities 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 Growth Opportunities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Growth Opportunities.
Diversification Opportunities for Barloworld and Growth Opportunities
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barloworld and Growth is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Growth Opportunities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Opportunities 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 Growth Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Opportunities has no effect on the direction of Barloworld i.e., Barloworld and Growth Opportunities go up and down completely randomly.
Pair Corralation between Barloworld and Growth Opportunities
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 5.24 times more return on investment than Growth Opportunities. However, Barloworld is 5.24 times more volatile than Growth Opportunities Fund. It trades about 0.07 of its potential returns per unit of risk. Growth Opportunities Fund is currently generating about 0.17 per unit of risk. If you would invest 403.00 in Barloworld Ltd ADR on August 28, 2024 and sell it today you would earn a total of 20.00 from holding Barloworld Ltd ADR or generate 4.96% 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. Growth Opportunities Fund
Performance |
| Timeline |
| Barloworld ADR |
| Growth Opportunities |
Barloworld and Growth Opportunities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Growth Opportunities
The main advantage of trading using opposite Barloworld and Growth Opportunities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Growth Opportunities 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 Growth Opportunities will offset losses from the drop in Growth Opportunities' long position.| Barloworld vs. United Rentals | Barloworld vs. AerCap Holdings NV | Barloworld vs. Fortress Transp Infra | Barloworld vs. U Haul Holding |
| Growth Opportunities vs. Small Cap Stock | Growth Opportunities vs. Ab E Opportunities | Growth Opportunities vs. Qs Large Cap | Growth Opportunities vs. Qs Growth 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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