Correlation Between SLR Investment and BHP Group
Can any of the company-specific risk be diversified away by investing in both SLR Investment 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 SLR Investment and BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SLR Investment Corp and BHP Group Limited, you can compare the effects of market volatilities on SLR Investment 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 SLR Investment with a short position of BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of SLR Investment and BHP Group.
Diversification Opportunities for SLR Investment and BHP Group
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SLR and BHP is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding SLR Investment Corp 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 SLR Investment 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 SLR Investment Corp 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 SLR Investment i.e., SLR Investment and BHP Group go up and down completely randomly.
Pair Corralation between SLR Investment and BHP Group
Assuming the 90 days horizon SLR Investment Corp is expected to generate 1.09 times more return on investment than BHP Group. However, SLR Investment is 1.09 times more volatile than BHP Group Limited. It trades about 0.23 of its potential returns per unit of risk. BHP Group Limited is currently generating about -0.01 per unit of risk. If you would invest 1,501 in SLR Investment Corp on September 15, 2024 and sell it today you would earn a total of 108.00 from holding SLR Investment Corp or generate 7.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SLR Investment Corp vs. BHP Group Limited
Performance |
| Timeline |
| SLR Investment Corp |
| BHP Group Limited |
SLR Investment and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SLR Investment and BHP Group
The main advantage of trading using opposite SLR Investment and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLR Investment 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.| SLR Investment vs. LION ONE METALS | SLR Investment vs. TAL Education Group | SLR Investment vs. Perdoceo Education | SLR Investment vs. Adtalem Global Education |
| BHP Group vs. BRIT AMER TOBACCO | BHP Group vs. United Internet AG | BHP Group vs. Scandinavian Tobacco Group | BHP Group vs. BW OFFSHORE LTD |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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