Correlation Between BII Railway and Xero
Can any of the company-specific risk be diversified away by investing in both BII Railway and Xero 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 BII Railway and Xero into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BII Railway Transportation and Xero, you can compare the effects of market volatilities on BII Railway and Xero 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 BII Railway with a short position of Xero. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and Xero.
Diversification Opportunities for BII Railway and Xero
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BII and Xero is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and Xero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xero and BII Railway 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 BII Railway Transportation are associated (or correlated) with Xero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xero has no effect on the direction of BII Railway i.e., BII Railway and Xero go up and down completely randomly.
Pair Corralation between BII Railway and Xero
Assuming the 90 days horizon BII Railway Transportation is expected to generate 0.83 times more return on investment than Xero. However, BII Railway Transportation is 1.2 times less risky than Xero. It trades about 0.23 of its potential returns per unit of risk. Xero is currently generating about -0.26 per unit of risk. If you would invest 2.60 in BII Railway Transportation on September 27, 2024 and sell it today you would earn a total of 0.20 from holding BII Railway Transportation or generate 7.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
BII Railway Transportation vs. Xero
Performance |
Timeline |
BII Railway Transpor |
Xero |
BII Railway and Xero Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BII Railway and Xero
The main advantage of trading using opposite BII Railway and Xero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway position performs unexpectedly, Xero 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 Xero will offset losses from the drop in Xero's long position.BII Railway vs. Accenture plc | BII Railway vs. International Business Machines | BII Railway vs. Infosys Limited | BII Railway vs. Cognizant Technology Solutions |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |