Correlation Between Fobi AI and Barloworld
Can any of the company-specific risk be diversified away by investing in both Fobi AI and Barloworld 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 Fobi AI and Barloworld into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fobi AI and Barloworld Ltd ADR, you can compare the effects of market volatilities on Fobi AI and Barloworld 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 Fobi AI with a short position of Barloworld. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fobi AI and Barloworld.
Diversification Opportunities for Fobi AI and Barloworld
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fobi and Barloworld is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Fobi AI and Barloworld Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barloworld ADR and Fobi AI 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 Fobi AI are associated (or correlated) with Barloworld. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barloworld ADR has no effect on the direction of Fobi AI i.e., Fobi AI and Barloworld go up and down completely randomly.
Pair Corralation between Fobi AI and Barloworld
Assuming the 90 days trading horizon Fobi AI is expected to under-perform the Barloworld. But the stock apears to be less risky and, when comparing its historical volatility, Fobi AI is 1.02 times less risky than Barloworld. The stock trades about -0.05 of its potential returns per unit of risk. The Barloworld Ltd ADR is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 417.00 in Barloworld Ltd ADR on October 1, 2024 and sell it today you would earn a total of 71.00 from holding Barloworld Ltd ADR or generate 17.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Fobi AI vs. Barloworld Ltd ADR
Performance |
| Timeline |
| Fobi AI |
| Barloworld ADR |
Fobi AI and Barloworld Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fobi AI and Barloworld
The main advantage of trading using opposite Fobi AI and Barloworld positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fobi AI position performs unexpectedly, Barloworld 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 Barloworld will offset losses from the drop in Barloworld's long position.| Fobi AI vs. iShares Canadian HYBrid | Fobi AI vs. Altagas Cum Red | Fobi AI vs. European Residential Real | Fobi AI vs. iShares Fundamental Hedged |
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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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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