Correlation Between American Funds and Barloworld
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Barloworld into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Growth and Barloworld Ltd ADR, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Barloworld. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Barloworld.
Diversification Opportunities for American Funds and Barloworld
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Barloworld is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Growth and Barloworld Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barloworld ADR and American Funds 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 American Funds Growth 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 American Funds i.e., American Funds and Barloworld go up and down completely randomly.
Pair Corralation between American Funds and Barloworld
Assuming the 90 days horizon American Funds is expected to generate 4.33 times less return on investment than Barloworld. But when comparing it to its historical volatility, American Funds Growth is 6.72 times less risky than Barloworld. It trades about 0.1 of its potential returns per unit of risk. Barloworld Ltd ADR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 403.00 in Barloworld Ltd ADR on August 27, 2024 and sell it today you would earn a total of 20.00 from holding Barloworld Ltd ADR or generate 4.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Growth vs. Barloworld Ltd ADR
Performance |
| Timeline |
| American Funds Growth |
| Barloworld ADR |
American Funds and Barloworld Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Barloworld
The main advantage of trading using opposite American Funds and Barloworld positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Ubs Money Series | American Funds vs. Plan Investment | American Funds vs. Franklin Government Money | American Funds vs. T Rowe Price |
| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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