Correlation Between Ferroglobe PLC and BHP Group
Can any of the company-specific risk be diversified away by investing in both Ferroglobe PLC 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 Ferroglobe PLC and BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferroglobe PLC and BHP Group Limited, you can compare the effects of market volatilities on Ferroglobe PLC 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 Ferroglobe PLC with a short position of BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferroglobe PLC and BHP Group.
Diversification Opportunities for Ferroglobe PLC and BHP Group
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ferroglobe and BHP is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ferroglobe PLC 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 Ferroglobe PLC 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 Ferroglobe PLC 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 Ferroglobe PLC i.e., Ferroglobe PLC and BHP Group go up and down completely randomly.
Pair Corralation between Ferroglobe PLC and BHP Group
Considering the 90-day investment horizon Ferroglobe PLC is expected to generate 2.21 times more return on investment than BHP Group. However, Ferroglobe PLC is 2.21 times more volatile than BHP Group Limited. It trades about 0.04 of its potential returns per unit of risk. BHP Group Limited is currently generating about -0.26 per unit of risk. If you would invest 428.00 in Ferroglobe PLC on August 30, 2024 and sell it today you would earn a total of 9.00 from holding Ferroglobe PLC or generate 2.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ferroglobe PLC vs. BHP Group Limited
Performance |
| Timeline |
| Ferroglobe PLC |
| BHP Group Limited |
Ferroglobe PLC and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferroglobe PLC and BHP Group
The main advantage of trading using opposite Ferroglobe PLC and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferroglobe PLC 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.| Ferroglobe PLC vs. Fury Gold Mines | Ferroglobe PLC vs. IperionX Limited American | Ferroglobe PLC vs. EMX Royalty Corp | Ferroglobe PLC vs. Materion |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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