Correlation Between Lowland Investment and BP PLC
Can any of the company-specific risk be diversified away by investing in both Lowland Investment and BP PLC 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 Lowland Investment and BP PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lowland Investment Co and BP PLC ADR, you can compare the effects of market volatilities on Lowland Investment and BP PLC 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 Lowland Investment with a short position of BP PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lowland Investment and BP PLC.
Diversification Opportunities for Lowland Investment and BP PLC
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lowland and 0HKP is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Lowland Investment Co and BP PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP PLC ADR and Lowland Investment 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 Lowland Investment Co are associated (or correlated) with BP PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP PLC ADR has no effect on the direction of Lowland Investment i.e., Lowland Investment and BP PLC go up and down completely randomly.
Pair Corralation between Lowland Investment and BP PLC
Assuming the 90 days trading horizon Lowland Investment is expected to generate 2.05 times less return on investment than BP PLC. But when comparing it to its historical volatility, Lowland Investment Co is 1.68 times less risky than BP PLC. It trades about 0.17 of its potential returns per unit of risk. BP PLC ADR is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,815 in BP PLC ADR on September 13, 2024 and sell it today you would earn a total of 213.00 from holding BP PLC ADR or generate 7.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lowland Investment Co vs. BP PLC ADR
Performance |
| Timeline |
| Lowland Investment |
| BP PLC ADR |
Lowland Investment and BP PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lowland Investment and BP PLC
The main advantage of trading using opposite Lowland Investment and BP PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lowland Investment position performs unexpectedly, BP PLC 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 BP PLC will offset losses from the drop in BP PLC's long position.| Lowland Investment vs. Catalyst Media Group | Lowland Investment vs. CATLIN GROUP | Lowland Investment vs. Tamburi Investment Partners | Lowland Investment vs. Magnora ASA |
| BP PLC vs. Silvercorp Metals | BP PLC vs. CleanTech Lithium plc | BP PLC vs. Blackrock World Mining | BP PLC vs. Endeavour Mining Corp |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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