Correlation Between Barloworld and Western Asset
Can any of the company-specific risk be diversified away by investing in both Barloworld and Western Asset 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 Western Asset 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 Western Asset Total, you can compare the effects of market volatilities on Barloworld and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Western Asset.
Diversification Opportunities for Barloworld and Western Asset
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barloworld and Western is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Western Asset Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Total 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Total has no effect on the direction of Barloworld i.e., Barloworld and Western Asset go up and down completely randomly.
Pair Corralation between Barloworld and Western Asset
Assuming the 90 days horizon Barloworld Ltd ADR is expected to under-perform the Western Asset. In addition to that, Barloworld is 15.85 times more volatile than Western Asset Total. It trades about -0.01 of its total potential returns per unit of risk. Western Asset Total is currently generating about 0.16 per unit of volatility. If you would invest 876.00 in Western Asset Total on September 1, 2024 and sell it today you would earn a total of 37.00 from holding Western Asset Total or generate 4.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Western Asset Total
Performance |
| Timeline |
| Barloworld ADR |
| Western Asset Total |
Barloworld and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Western Asset
The main advantage of trading using opposite Barloworld and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Western Asset vs. Transamerica Emerging Markets | Western Asset vs. Artisan Emerging Markets | Western Asset vs. Pnc Emerging Markets | Western Asset vs. Aqr Long Short Equity |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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