Correlation Between Barloworld and Gabelli ETFs

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

Diversification Opportunities for Barloworld and Gabelli ETFs

0.51

Correlation Coefficient

Barloworld  Gabelli ETFs

Very weak diversification

The 3 months correlation between Barloworld and Gabelli is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Gabelli ETFs Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli ETFs 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 Gabelli ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli ETFs Trust has no effect on the direction of Barloworld i.e., Barloworld and Gabelli ETFs go up and down completely randomly.

Pair Corralation between Barloworld and Gabelli ETFs

Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 7.13 times more return on investment than Gabelli ETFs. However, Barloworld is 7.13 times more volatile than Gabelli ETFs Trust. It trades about 0.14 of its potential returns per unit of risk. Gabelli ETFs Trust is currently generating about 0.11 per unit of risk. If you would invest  403.00  in Barloworld Ltd ADR on October 8, 2024 and sell it today you would earn a total of  258.00  from holding Barloworld Ltd ADR or generate 64.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Barloworld Ltd ADR  vs.  Gabelli ETFs Trust

Barloworld ADR

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Barloworld Ltd ADR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Barloworld showed solid returns over the last few months and may actually be approaching a breakup point.

Gabelli ETFs Trust

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli ETFs Trust are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Gabelli ETFs may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Barloworld and Gabelli ETFs

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

The idea behind Barloworld Ltd ADR and Gabelli ETFs 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.