Correlation Between De Grey and BHP Group
Can any of the company-specific risk be diversified away by investing in both De Grey 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 De Grey and BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between De Grey Mining and BHP Group Limited, you can compare the effects of market volatilities on De Grey 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 De Grey with a short position of BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Grey and BHP Group.
Diversification Opportunities for De Grey and BHP Group
Excellent diversification
The 3 months correlation between DGD and BHP is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining 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 De Grey 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 De Grey Mining 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 De Grey i.e., De Grey and BHP Group go up and down completely randomly.
Pair Corralation between De Grey and BHP Group
Assuming the 90 days trading horizon De Grey Mining is expected to generate 1.26 times more return on investment than BHP Group. However, De Grey is 1.26 times more volatile than BHP Group Limited. It trades about 0.42 of its potential returns per unit of risk. BHP Group Limited is currently generating about 0.02 per unit of risk. If you would invest 104.00 in De Grey Mining on October 26, 2024 and sell it today you would earn a total of 13.00 from holding De Grey Mining or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
De Grey Mining vs. BHP Group Limited
Performance |
| Timeline |
| De Grey Mining |
| BHP Group Limited |
De Grey and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with De Grey and BHP Group
The main advantage of trading using opposite De Grey and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Grey 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.| De Grey vs. Molson Coors Beverage | De Grey vs. National Beverage Corp | De Grey vs. PENN Entertainment | De Grey vs. PARKEN Sport Entertainment |
| BHP Group vs. De Grey Mining | BHP Group vs. MCEWEN MINING INC | BHP Group vs. Ameriprise Financial | BHP Group vs. GREENX METALS LTD |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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