Correlation Between Bell Financial and BHP Group
Can any of the company-specific risk be diversified away by investing in both Bell Financial 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 Bell Financial and BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bell Financial Group and BHP Group Limited, you can compare the effects of market volatilities on Bell Financial 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 Bell Financial with a short position of BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bell Financial and BHP Group.
Diversification Opportunities for Bell Financial and BHP Group
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bell and BHP is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Bell Financial Group 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 Bell Financial 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 Bell Financial Group 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 Bell Financial i.e., Bell Financial and BHP Group go up and down completely randomly.
Pair Corralation between Bell Financial and BHP Group
Assuming the 90 days trading horizon Bell Financial Group is expected to generate 0.93 times more return on investment than BHP Group. However, Bell Financial Group is 1.08 times less risky than BHP Group. It trades about 0.06 of its potential returns per unit of risk. BHP Group Limited is currently generating about -0.05 per unit of risk. If you would invest 130.00 in Bell Financial Group on December 2, 2024 and sell it today you would earn a total of 5.00 from holding Bell Financial Group or generate 3.85% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Bell Financial Group vs. BHP Group Limited
Performance |
Timeline |
Bell Financial Group |
BHP Group Limited |
Bell Financial and BHP Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bell Financial and BHP Group
The main advantage of trading using opposite Bell Financial and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bell Financial 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.Bell Financial vs. Beston Global Food | Bell Financial vs. Catalyst Metals | Bell Financial vs. Tambourah Metals | Bell Financial vs. Asian Battery Metals |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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