Correlation Between Barloworld and Teekay
Can any of the company-specific risk be diversified away by investing in both Barloworld and Teekay 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 Teekay 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 Teekay, you can compare the effects of market volatilities on Barloworld and Teekay 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 Teekay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Teekay.
Diversification Opportunities for Barloworld and Teekay
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barloworld and Teekay is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Teekay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teekay 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 Teekay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teekay has no effect on the direction of Barloworld i.e., Barloworld and Teekay go up and down completely randomly.
Pair Corralation between Barloworld and Teekay
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 1.81 times more return on investment than Teekay. However, Barloworld is 1.81 times more volatile than Teekay. It trades about 0.07 of its potential returns per unit of risk. Teekay is currently generating about 0.02 per unit of risk. If you would invest 403.00 in Barloworld Ltd ADR on August 24, 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 | 95.65% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Teekay
Performance |
| Timeline |
| Barloworld ADR |
| Teekay |
Barloworld and Teekay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Teekay
The main advantage of trading using opposite Barloworld and Teekay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Teekay 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 Teekay will offset losses from the drop in Teekay's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Teekay vs. Teekay Tankers | Teekay vs. DHT Holdings | Teekay vs. Frontline | Teekay vs. International Seaways |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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