Correlation Between Challenger and BHP Group
Can any of the company-specific risk be diversified away by investing in both Challenger 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 Challenger and BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Challenger and BHP Group Limited, you can compare the effects of market volatilities on Challenger 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 Challenger with a short position of BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Challenger and BHP Group.
Diversification Opportunities for Challenger and BHP Group
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Challenger and BHP is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Challenger 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 Challenger 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 Challenger 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 Challenger i.e., Challenger and BHP Group go up and down completely randomly.
Pair Corralation between Challenger and BHP Group
Assuming the 90 days trading horizon Challenger is expected to generate 1.11 times more return on investment than BHP Group. However, Challenger is 1.11 times more volatile than BHP Group Limited. It trades about 0.13 of its potential returns per unit of risk. BHP Group Limited is currently generating about -0.2 per unit of risk. If you would invest 600.00 in Challenger on September 2, 2024 and sell it today you would earn a total of 22.00 from holding Challenger or generate 3.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Challenger vs. BHP Group Limited
Performance |
| Timeline |
| Challenger |
| BHP Group Limited |
Challenger and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Challenger and BHP Group
The main advantage of trading using opposite Challenger and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Challenger 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.| Challenger vs. RLF AgTech | Challenger vs. Ainsworth Game Technology | Challenger vs. Advanced Braking Technology | Challenger vs. Sandon Capital Investments |
| BHP Group vs. Charter Hall Education | BHP Group vs. Ainsworth Game Technology | BHP Group vs. RLF AgTech | BHP Group vs. Stelar Metals |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |