Correlation Between Intuit and BHPA

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

By analyzing existing cross correlation between Intuit Inc and BHPA Inc, you can compare the effects of market volatilities on Intuit and BHPA 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 Intuit with a short position of BHPA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intuit and BHPA.

Diversification Opportunities for Intuit and BHPA

0.37

Correlation Coefficient

Intuit  BHPA

Weak diversification

The 3 months correlation between Intuit and BHPA is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Intuit Inc and BHPA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHPA Inc and Intuit 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 Intuit Inc are associated (or correlated) with BHPA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHPA Inc has no effect on the direction of Intuit i.e., Intuit and BHPA go up and down completely randomly.

Pair Corralation between Intuit and BHPA

Given the investment horizon of 90 days Intuit is expected to generate 5.01 times less return on investment than BHPA. But when comparing it to its historical volatility, Intuit Inc is 8.29 times less risky than BHPA. It trades about 0.07 of its potential returns per unit of risk. BHPA Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1.50  in BHPA Inc on September 12, 2024 and sell it today you would lose (1.24) from holding BHPA Inc or give up 82.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Intuit Inc  vs.  BHPA Inc

Intuit Inc

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Intuit Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Intuit is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

BHPA Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BHPA Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BHPA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Intuit and BHPA

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

The idea behind Intuit Inc and BHPA Inc 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.