Correlation Between BHP and Bolsa Mexicana

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

By analyzing existing cross correlation between BHP Group and Bolsa Mexicana de, you can compare the effects of market volatilities on BHP and Bolsa Mexicana 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 BHP with a short position of Bolsa Mexicana. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP and Bolsa Mexicana.

Diversification Opportunities for BHP and Bolsa Mexicana

0.22

Correlation Coefficient

BHP  Bolsa Mexicana

Modest diversification

The 3 months correlation between BHP and Bolsa is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group and Bolsa Mexicana de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bolsa Mexicana de and BHP 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 BHP Group are associated (or correlated) with Bolsa Mexicana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bolsa Mexicana de has no effect on the direction of BHP i.e., BHP and Bolsa Mexicana go up and down completely randomly.

Pair Corralation between BHP and Bolsa Mexicana

If you would invest  3,258  in Bolsa Mexicana de on September 23, 2024 and sell it today you would earn a total of  136.00  from holding Bolsa Mexicana de or generate 4.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.62%
Values	Daily Returns

BHP Group  vs.  Bolsa Mexicana de

BHP Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BHP Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, BHP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bolsa Mexicana de

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bolsa Mexicana de are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating essential indicators, Bolsa Mexicana may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BHP and Bolsa Mexicana

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

The idea behind BHP Group and Bolsa Mexicana de 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.