Correlation Between Global Fixed and Barloworld
Can any of the company-specific risk be diversified away by investing in both Global Fixed and Barloworld 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 Global Fixed and Barloworld into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Fixed Income and Barloworld Ltd ADR, you can compare the effects of market volatilities on Global Fixed and Barloworld 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 Global Fixed with a short position of Barloworld. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Fixed and Barloworld.
Diversification Opportunities for Global Fixed and Barloworld
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Global and Barloworld is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Global Fixed Income and Barloworld Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barloworld ADR and Global Fixed 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 Global Fixed Income are associated (or correlated) with Barloworld. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barloworld ADR has no effect on the direction of Global Fixed i.e., Global Fixed and Barloworld go up and down completely randomly.
Pair Corralation between Global Fixed and Barloworld
Assuming the 90 days horizon Global Fixed is expected to generate 20.45 times less return on investment than Barloworld. But when comparing it to its historical volatility, Global Fixed Income is 27.19 times less risky than Barloworld. It trades about 0.23 of its potential returns per unit of risk. Barloworld Ltd ADR is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 354.00 in Barloworld Ltd ADR on February 23, 2024 and sell it today you would earn a total of 80.00 from holding Barloworld Ltd ADR or generate 22.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Global Fixed Income vs. Barloworld Ltd ADR
Performance |
Timeline |
Global Fixed Income |
Barloworld ADR |
Global Fixed and Barloworld Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Global Fixed and Barloworld
The main advantage of trading using opposite Global Fixed and Barloworld positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Fixed position performs unexpectedly, Barloworld 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 Barloworld will offset losses from the drop in Barloworld's long position.Global Fixed vs. HUMANA INC | Global Fixed vs. Aquagold International | Global Fixed vs. Barloworld Ltd ADR | Global Fixed vs. High Yield Municipal Fund |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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