Correlation Between SBI Insurance and BHP Group
Can any of the company-specific risk be diversified away by investing in both SBI Insurance 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 SBI Insurance and BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBI Insurance Group and BHP Group Limited, you can compare the effects of market volatilities on SBI Insurance 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 SBI Insurance with a short position of BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Insurance and BHP Group.
Diversification Opportunities for SBI Insurance and BHP Group
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBI and BHP is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding SBI Insurance Group 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 SBI Insurance 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 SBI Insurance Group 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 SBI Insurance i.e., SBI Insurance and BHP Group go up and down completely randomly.
Pair Corralation between SBI Insurance and BHP Group
Assuming the 90 days trading horizon SBI Insurance is expected to generate 2.55 times less return on investment than BHP Group. In addition to that, SBI Insurance is 1.25 times more volatile than BHP Group Limited. It trades about 0.01 of its total potential returns per unit of risk. BHP Group Limited is currently generating about 0.02 per unit of volatility. If you would invest 2,394 in BHP Group Limited on September 12, 2024 and sell it today you would earn a total of 163.00 from holding BHP Group Limited or generate 6.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBI Insurance Group vs. BHP Group Limited
Performance |
| Timeline |
| SBI Insurance Group |
| BHP Group Limited |
SBI Insurance and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBI Insurance and BHP Group
The main advantage of trading using opposite SBI Insurance and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Insurance 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.| SBI Insurance vs. Apple Inc | SBI Insurance vs. Apple Inc | SBI Insurance vs. Apple Inc | SBI Insurance vs. Apple Inc |
| BHP Group vs. National Retail Properties | BHP Group vs. Strategic Education | BHP Group vs. Vastned Retail NV | BHP Group vs. EEDUCATION ALBERT AB |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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