Correlation Between Barloworld and Voya Real

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

By analyzing existing cross correlation between Barloworld Ltd ADR and Voya Real Estate, you can compare the effects of market volatilities on Barloworld and Voya Real 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 Barloworld with a short position of Voya Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Voya Real.

Diversification Opportunities for Barloworld and Voya Real

-0.41

Correlation Coefficient

Barloworld  Voya Real

Very good diversification

The 3 months correlation between Barloworld and Voya is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Voya Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Real Estate and Barloworld 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 Barloworld Ltd ADR are associated (or correlated) with Voya Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Real Estate has no effect on the direction of Barloworld i.e., Barloworld and Voya Real go up and down completely randomly.

Pair Corralation between Barloworld and Voya Real

Assuming the 90 days horizon Barloworld Ltd ADR is expected to under-perform the Voya Real. In addition to that, Barloworld is 3.93 times more volatile than Voya Real Estate. It trades about -0.03 of its total potential returns per unit of risk. Voya Real Estate is currently generating about 0.01 per unit of volatility. If you would invest  816.00  in Voya Real Estate on December 23, 2024 and sell it today you would earn a total of  3.00  from holding Voya Real Estate or generate 0.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.16%
Values	Daily Returns

Barloworld Ltd ADR  vs.  Voya Real Estate

Barloworld ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Barloworld Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Voya Real Estate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Voya Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Voya Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Barloworld and Voya Real

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

The idea behind Barloworld Ltd ADR and Voya Real Estate 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.