Correlation Between Mystate and BHP Group
Can any of the company-specific risk be diversified away by investing in both Mystate 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 Mystate and BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mystate and BHP Group Limited, you can compare the effects of market volatilities on Mystate 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 Mystate with a short position of BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mystate and BHP Group.
Diversification Opportunities for Mystate and BHP Group
Excellent diversification
The 3 months correlation between Mystate and BHP is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Mystate 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 Mystate 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 Mystate 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 Mystate i.e., Mystate and BHP Group go up and down completely randomly.
Pair Corralation between Mystate and BHP Group
Assuming the 90 days trading horizon Mystate is expected to generate 1.16 times more return on investment than BHP Group. However, Mystate is 1.16 times more volatile than BHP Group Limited. It trades about 0.27 of its potential returns per unit of risk. BHP Group Limited is currently generating about -0.19 per unit of risk. If you would invest 380.00 in Mystate on September 1, 2024 and sell it today you would earn a total of 31.00 from holding Mystate or generate 8.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mystate vs. BHP Group Limited
Performance |
| Timeline |
| Mystate |
| BHP Group Limited |
Mystate and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mystate and BHP Group
The main advantage of trading using opposite Mystate and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mystate 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.| Mystate vs. Alto Metals | Mystate vs. Queste Communications | Mystate vs. Cleanaway Waste Management | Mystate vs. Olivers Real Food |
| BHP Group vs. Infomedia | BHP Group vs. Kneomedia | BHP Group vs. Gold Road Resources | BHP Group vs. Apiam Animal Health |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |