Correlation Between CDL INVESTMENT and BHP Group
Can any of the company-specific risk be diversified away by investing in both CDL 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 CDL 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 CDL INVESTMENT and BHP Group Limited, you can compare the effects of market volatilities on CDL 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 CDL INVESTMENT with a short position of BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDL INVESTMENT and BHP Group.
Diversification Opportunities for CDL INVESTMENT and BHP Group
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CDL and BHP is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding CDL 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 CDL 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 CDL 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 CDL INVESTMENT i.e., CDL INVESTMENT and BHP Group go up and down completely randomly.
Pair Corralation between CDL INVESTMENT and BHP Group
Assuming the 90 days trading horizon CDL INVESTMENT is expected to generate 1.43 times more return on investment than BHP Group. However, CDL INVESTMENT is 1.43 times more volatile than BHP Group Limited. It trades about 0.02 of its potential returns per unit of risk. BHP Group Limited is currently generating about 0.01 per unit of risk. If you would invest 38.00 in CDL INVESTMENT on September 14, 2024 and sell it today you would earn a total of 5.00 from holding CDL INVESTMENT or generate 13.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDL INVESTMENT vs. BHP Group Limited
Performance |
| Timeline |
| CDL INVESTMENT |
| BHP Group Limited |
CDL INVESTMENT and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDL INVESTMENT and BHP Group
The main advantage of trading using opposite CDL INVESTMENT and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDL 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.| CDL INVESTMENT vs. Apple Inc | CDL INVESTMENT vs. Apple Inc | CDL INVESTMENT vs. Apple Inc | CDL INVESTMENT vs. Apple Inc |
| BHP Group vs. Chuangs China Investments | BHP Group vs. New Residential Investment | BHP Group vs. CDL INVESTMENT | BHP Group vs. SLR Investment Corp |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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