Correlation Between BankUnited and Harmony Gold

Can any of the company-specific risk be diversified away by investing in both BankUnited and Harmony Gold 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 BankUnited and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BankUnited and Harmony Gold Mining, you can compare the effects of market volatilities on BankUnited and Harmony Gold 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 BankUnited with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of BankUnited and Harmony Gold.

Diversification Opportunities for BankUnited and Harmony Gold

0.44

Correlation Coefficient

BankUnited  Harmony Gold

Very weak diversification

The 3 months correlation between BankUnited and Harmony is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding BankUnited and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining and BankUnited 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 BankUnited are associated (or correlated) with Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of BankUnited i.e., BankUnited and Harmony Gold go up and down completely randomly.

Pair Corralation between BankUnited and Harmony Gold

Considering the 90-day investment horizon BankUnited is expected to generate 58.99 times less return on investment than Harmony Gold. But when comparing it to its historical volatility, BankUnited is 2.36 times less risky than Harmony Gold. It trades about 0.0 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  283.00  in Harmony Gold Mining on March 5, 2024 and sell it today you would earn a total of  597.00  from holding Harmony Gold Mining or generate 210.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	81.41%
Values	Daily Returns

BankUnited  vs.  Harmony Gold Mining

BankUnited

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BankUnited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting forward-looking signals, BankUnited may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Harmony Gold Mining

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Harmony Gold Mining are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Harmony Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BankUnited and Harmony Gold

The main advantage of trading using opposite BankUnited and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BankUnited position performs unexpectedly, Harmony Gold 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 Harmony Gold will offset losses from the drop in Harmony Gold's long position.

The idea behind BankUnited and Harmony Gold Mining pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.