Correlation Between Brimstone Investment and BHP Group
Can any of the company-specific risk be diversified away by investing in both Brimstone Investment and BHP Group 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 Brimstone Investment and BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brimstone Investment and BHP Group Limited, you can compare the effects of market volatilities on Brimstone Investment and BHP Group 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 Brimstone Investment with a short position of BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brimstone Investment and BHP Group.
Diversification Opportunities for Brimstone Investment and BHP Group
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Brimstone and BHP is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Brimstone Investment and BHP Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group Limited and Brimstone Investment 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 Brimstone Investment are associated (or correlated) with BHP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHP Group Limited has no effect on the direction of Brimstone Investment i.e., Brimstone Investment and BHP Group go up and down completely randomly.
Pair Corralation between Brimstone Investment and BHP Group
Assuming the 90 days trading horizon Brimstone Investment is expected to generate 2.48 times more return on investment than BHP Group. However, Brimstone Investment is 2.48 times more volatile than BHP Group Limited. It trades about 0.01 of its potential returns per unit of risk. BHP Group Limited is currently generating about 0.0 per unit of risk. If you would invest 59,460 in Brimstone Investment on December 11, 2024 and sell it today you would lose (11,460) from holding Brimstone Investment or give up 19.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brimstone Investment vs. BHP Group Limited
Performance |
| Timeline |
| Brimstone Investment |
| BHP Group Limited |
Brimstone Investment and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brimstone Investment and BHP Group
The main advantage of trading using opposite Brimstone Investment and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brimstone Investment position performs unexpectedly, BHP Group 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 BHP Group will offset losses from the drop in BHP Group's long position.| Brimstone Investment vs. Bytes Technology | ||
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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