Correlation Between Transportadora and BHP Group
Can any of the company-specific risk be diversified away by investing in both Transportadora 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 Transportadora and BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transportadora de Gas and BHP Group Limited, you can compare the effects of market volatilities on Transportadora 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 Transportadora with a short position of BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportadora and BHP Group.
Diversification Opportunities for Transportadora and BHP Group
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Transportadora and BHP is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas 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 Transportadora 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 Transportadora de Gas 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 Transportadora i.e., Transportadora and BHP Group go up and down completely randomly.
Pair Corralation between Transportadora and BHP Group
Assuming the 90 days trading horizon Transportadora de Gas is expected to generate 1.48 times more return on investment than BHP Group. However, Transportadora is 1.48 times more volatile than BHP Group Limited. It trades about 0.11 of its potential returns per unit of risk. BHP Group Limited is currently generating about -0.09 per unit of risk. If you would invest 445,170 in Transportadora de Gas on September 1, 2024 and sell it today you would earn a total of 214,830 from holding Transportadora de Gas or generate 48.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Transportadora de Gas vs. BHP Group Limited
Performance |
| Timeline |
| Transportadora de Gas |
| BHP Group Limited |
Transportadora and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transportadora and BHP Group
The main advantage of trading using opposite Transportadora and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora 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.| Transportadora vs. American Express Co | Transportadora vs. United States Steel | Transportadora vs. Pfizer Inc | Transportadora vs. Distribuidora de Gas |
| BHP Group vs. Transportadora de Gas | BHP Group vs. United States Steel | BHP Group vs. Agrometal SAI | BHP Group vs. Harmony Gold Mining |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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