Correlation Between Guaranty Trust and BHP Group
Can any of the company-specific risk be diversified away by investing in both Guaranty Trust 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 Guaranty Trust and BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guaranty Trust Holding and BHP Group Limited, you can compare the effects of market volatilities on Guaranty Trust 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 Guaranty Trust with a short position of BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guaranty Trust and BHP Group.
Diversification Opportunities for Guaranty Trust and BHP Group
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Guaranty and BHP is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Guaranty Trust Holding 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 Guaranty Trust 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 Guaranty Trust Holding 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 Guaranty Trust i.e., Guaranty Trust and BHP Group go up and down completely randomly.
Pair Corralation between Guaranty Trust and BHP Group
Assuming the 90 days trading horizon Guaranty Trust Holding is expected to generate 1.18 times more return on investment than BHP Group. However, Guaranty Trust is 1.18 times more volatile than BHP Group Limited. It trades about 0.0 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 188.00 in Guaranty Trust Holding on September 3, 2024 and sell it today you would lose (3.00) from holding Guaranty Trust Holding or give up 1.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Guaranty Trust Holding vs. BHP Group Limited
Performance |
| Timeline |
| Guaranty Trust Holding |
| BHP Group Limited |
Guaranty Trust and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guaranty Trust and BHP Group
The main advantage of trading using opposite Guaranty Trust and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guaranty Trust 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.| Guaranty Trust vs. Lendinvest PLC | Guaranty Trust vs. Bank of Ireland | Guaranty Trust vs. Greenroc Mining PLC | Guaranty Trust vs. Lundin Mining Corp |
| BHP Group vs. Cardinal Health | BHP Group vs. Omega Healthcare Investors | BHP Group vs. X FAB Silicon Foundries | BHP Group vs. MyHealthChecked Plc |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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