Correlation Between OFS Credit and Barloworld
Can any of the company-specific risk be diversified away by investing in both OFS Credit 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 OFS Credit and Barloworld into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OFS Credit and Barloworld Ltd ADR, you can compare the effects of market volatilities on OFS Credit 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 OFS Credit with a short position of Barloworld. Check out your portfolio center. Please also check ongoing floating volatility patterns of OFS Credit and Barloworld.
Diversification Opportunities for OFS Credit and Barloworld
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between OFS and Barloworld is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding OFS Credit and Barloworld Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barloworld ADR and OFS Credit 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 OFS Credit 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 OFS Credit i.e., OFS Credit and Barloworld go up and down completely randomly.
Pair Corralation between OFS Credit and Barloworld
Assuming the 90 days horizon OFS Credit is expected to generate 17.67 times less return on investment than Barloworld. But when comparing it to its historical volatility, OFS Credit is 13.5 times less risky than Barloworld. It trades about 0.05 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 31, 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 |
OFS Credit vs. Barloworld Ltd ADR
Performance |
| Timeline |
| OFS Credit |
| Barloworld ADR |
OFS Credit and Barloworld Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OFS Credit and Barloworld
The main advantage of trading using opposite OFS Credit and Barloworld positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OFS Credit 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.| OFS Credit vs. The Gabelli Equity | OFS Credit vs. The Gabelli Equity | OFS Credit vs. The Gabelli Utility | OFS Credit vs. Bancroft Fund |
| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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