Correlation Between Barloworld and National Capital
Can any of the company-specific risk be diversified away by investing in both Barloworld and National Capital 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 National Capital 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 National Capital Bank, you can compare the effects of market volatilities on Barloworld and National Capital 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 National Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and National Capital.
Diversification Opportunities for Barloworld and National Capital
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Barloworld and National is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and National Capital Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Capital Bank 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 National Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Capital Bank has no effect on the direction of Barloworld i.e., Barloworld and National Capital go up and down completely randomly.
Pair Corralation between Barloworld and National Capital
Assuming the 90 days horizon Barloworld is expected to generate 1.38 times less return on investment than National Capital. In addition to that, Barloworld is 1.25 times more volatile than National Capital Bank. It trades about 0.05 of its total potential returns per unit of risk. National Capital Bank is currently generating about 0.08 per unit of volatility. If you would invest 4,001 in National Capital Bank on December 4, 2024 and sell it today you would earn a total of 2,599 from holding National Capital Bank or generate 64.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 93.55% |
Values | Daily Returns |
Barloworld Ltd ADR vs. National Capital Bank
Performance |
Timeline |
Barloworld ADR |
National Capital Bank |
Barloworld and National Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Barloworld and National Capital
The main advantage of trading using opposite Barloworld and National Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, National Capital 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 National Capital will offset losses from the drop in National Capital's long position.Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
National Capital vs. Delhi Bank Corp | National Capital vs. CCSB Financial Corp | National Capital vs. Bank of Utica | National Capital vs. BEO Bancorp |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
CEOs Directory Screen CEOs from public companies around the world | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |