Correlation Between Suncorp and BHP Group
Can any of the company-specific risk be diversified away by investing in both Suncorp 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 Suncorp and BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suncorp Group and BHP Group Limited, you can compare the effects of market volatilities on Suncorp 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 Suncorp with a short position of BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suncorp and BHP Group.
Diversification Opportunities for Suncorp and BHP Group
Good diversification
The 3 months correlation between Suncorp and BHP is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Suncorp 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 Suncorp 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 Suncorp 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 Suncorp i.e., Suncorp and BHP Group go up and down completely randomly.
Pair Corralation between Suncorp and BHP Group
Assuming the 90 days trading horizon Suncorp Group is expected to generate 0.92 times more return on investment than BHP Group. However, Suncorp Group is 1.09 times less risky than BHP Group. It trades about 0.16 of its potential returns per unit of risk. BHP Group Limited is currently generating about -0.03 per unit of risk. If you would invest 1,537 in Suncorp Group on August 28, 2024 and sell it today you would earn a total of 423.00 from holding Suncorp Group or generate 27.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Suncorp Group vs. BHP Group Limited
Performance |
| Timeline |
| Suncorp Group |
| BHP Group Limited |
Suncorp and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suncorp and BHP Group
The main advantage of trading using opposite Suncorp and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suncorp 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.| Suncorp vs. Viva Leisure | Suncorp vs. BKI Investment | Suncorp vs. Hotel Property Investments | Suncorp vs. Carlton Investments |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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