Correlation Between Super Retail and BHP Group
Can any of the company-specific risk be diversified away by investing in both Super Retail 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 Super Retail and BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Super Retail Group and BHP Group Limited, you can compare the effects of market volatilities on Super Retail 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 Super Retail with a short position of BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Super Retail and BHP Group.
Diversification Opportunities for Super Retail and BHP Group
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Super and BHP is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Super Retail 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 Super Retail 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 Super Retail 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 Super Retail i.e., Super Retail and BHP Group go up and down completely randomly.
Pair Corralation between Super Retail and BHP Group
Assuming the 90 days trading horizon Super Retail Group is expected to generate 1.33 times more return on investment than BHP Group. However, Super Retail is 1.33 times more volatile than BHP Group Limited. It trades about 0.06 of its potential returns per unit of risk. BHP Group Limited is currently generating about -0.04 per unit of risk. If you would invest 1,284 in Super Retail Group on August 25, 2024 and sell it today you would earn a total of 166.00 from holding Super Retail Group or generate 12.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Super Retail Group vs. BHP Group Limited
Performance |
| Timeline |
| Super Retail Group |
| BHP Group Limited |
Super Retail and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Super Retail and BHP Group
The main advantage of trading using opposite Super Retail and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Super Retail 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.| Super Retail vs. REGAL ASIAN INVESTMENTS | Super Retail vs. Qbe Insurance Group | Super Retail vs. Wt Financial Group | Super Retail vs. Kkr Credit Income |
| BHP Group vs. Super Retail Group | BHP Group vs. Eagle Mountain Mining | BHP Group vs. Wt Financial Group | BHP Group vs. Pioneer Credit |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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