Correlation Between Home Capital and Berkeley Energia
Can any of the company-specific risk be diversified away by investing in both Home Capital and Berkeley Energia 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 Home Capital and Berkeley Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Capital Rentals and Berkeley Energia Limited, you can compare the effects of market volatilities on Home Capital and Berkeley Energia 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 Home Capital with a short position of Berkeley Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Capital and Berkeley Energia.
Diversification Opportunities for Home Capital and Berkeley Energia
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Home and Berkeley is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Home Capital Rentals and Berkeley Energia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkeley Energia and Home Capital 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 Home Capital Rentals are associated (or correlated) with Berkeley Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkeley Energia has no effect on the direction of Home Capital i.e., Home Capital and Berkeley Energia go up and down completely randomly.
Pair Corralation between Home Capital and Berkeley Energia
Assuming the 90 days trading horizon Home Capital Rentals is expected to generate 0.33 times more return on investment than Berkeley Energia. However, Home Capital Rentals is 3.01 times less risky than Berkeley Energia. It trades about -0.03 of its potential returns per unit of risk. Berkeley Energia Limited is currently generating about -0.04 per unit of risk. If you would invest 680.00 in Home Capital Rentals on September 3, 2024 and sell it today you would lose (25.00) from holding Home Capital Rentals or give up 3.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.57% |
| Values | Daily Returns |
Home Capital Rentals vs. Berkeley Energia Limited
Performance |
| Timeline |
| Home Capital Rentals |
| Berkeley Energia |
Home Capital and Berkeley Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Capital and Berkeley Energia
The main advantage of trading using opposite Home Capital and Berkeley Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Capital position performs unexpectedly, Berkeley Energia 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 Berkeley Energia will offset losses from the drop in Berkeley Energia's long position.| Home Capital vs. Airbus Group SE | Home Capital vs. Industria de Diseno | Home Capital vs. Vale SA | Home Capital vs. Iberdrola SA |
| Berkeley Energia vs. Neinor Homes SLU | Berkeley Energia vs. Cellnex Telecom SA | Berkeley Energia vs. Atrys Health SL | Berkeley Energia vs. Inhome Prime Properties |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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