Correlation Between Sequoia Financial and BHP Group
Can any of the company-specific risk be diversified away by investing in both Sequoia Financial 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 Sequoia Financial and BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sequoia Financial Group and BHP Group Limited, you can compare the effects of market volatilities on Sequoia Financial 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 Sequoia Financial with a short position of BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sequoia Financial and BHP Group.
Diversification Opportunities for Sequoia Financial and BHP Group
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sequoia and BHP is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Sequoia Financial Group 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 Sequoia Financial 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 Sequoia Financial Group 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 Sequoia Financial i.e., Sequoia Financial and BHP Group go up and down completely randomly.
Pair Corralation between Sequoia Financial and BHP Group
Assuming the 90 days trading horizon Sequoia Financial Group is expected to generate 2.02 times more return on investment than BHP Group. However, Sequoia Financial is 2.02 times more volatile than BHP Group Limited. It trades about 0.15 of its potential returns per unit of risk. BHP Group Limited is currently generating about -0.36 per unit of risk. If you would invest 38.00 in Sequoia Financial Group on October 12, 2024 and sell it today you would earn a total of 2.00 from holding Sequoia Financial Group or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sequoia Financial Group vs. BHP Group Limited
Performance |
| Timeline |
| Sequoia Financial |
| BHP Group Limited |
Sequoia Financial and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sequoia Financial and BHP Group
The main advantage of trading using opposite Sequoia Financial and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sequoia Financial 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.| Sequoia Financial vs. Cleanaway Waste Management | Sequoia Financial vs. Phoslock Environmental Technologies | Sequoia Financial vs. Lendlease Group | Sequoia Financial vs. Vulcan Steel |
| BHP Group vs. MotorCycle Holdings | BHP Group vs. BSP Financial Group | BHP Group vs. Commonwealth Bank of | BHP Group vs. Sequoia Financial Group |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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