Correlation Between Barloworld and VanEck ETF

Can any of the company-specific risk be diversified away by investing in both Barloworld and VanEck ETF 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 VanEck ETF 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 VanEck ETF Trust, you can compare the effects of market volatilities on Barloworld and VanEck ETF 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 VanEck ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and VanEck ETF.

Diversification Opportunities for Barloworld and VanEck ETF

-0.49

Correlation Coefficient

Barloworld  VanEck ETF

Very good diversification

The 3 months correlation between Barloworld and VanEck is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and VanEck ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck ETF Trust 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 VanEck ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck ETF Trust has no effect on the direction of Barloworld i.e., Barloworld and VanEck ETF go up and down completely randomly.

Pair Corralation between Barloworld and VanEck ETF

Assuming the 90 days horizon Barloworld Ltd ADR is expected to under-perform the VanEck ETF. In addition to that, Barloworld is 51.07 times more volatile than VanEck ETF Trust. It trades about -0.02 of its total potential returns per unit of risk. VanEck ETF Trust is currently generating about 0.23 per unit of volatility. If you would invest  5,227  in VanEck ETF Trust on December 30, 2024 and sell it today you would earn a total of  58.00  from holding VanEck ETF Trust or generate 1.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.16%
Values	Daily Returns

Barloworld Ltd ADR  vs.  VanEck ETF Trust

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 fairly strong basic indicators, Barloworld is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

VanEck ETF Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck ETF Trust are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, VanEck ETF is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Barloworld and VanEck ETF

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

The idea behind Barloworld Ltd ADR and VanEck ETF Trust 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.