Correlation Between TrueShares Technology and Barloworld

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

By analyzing existing cross correlation between TrueShares Technology AI and Barloworld Ltd ADR, you can compare the effects of market volatilities on TrueShares Technology and Barloworld 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 TrueShares Technology with a short position of Barloworld. Check out your portfolio center. Please also check ongoing floating volatility patterns of TrueShares Technology and Barloworld.

Diversification Opportunities for TrueShares Technology and Barloworld

0.08

Correlation Coefficient

TrueShares Technology  Barloworld

Significant diversification

The 3 months correlation between TrueShares and Barloworld is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding TrueShares Technology AI and Barloworld Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barloworld ADR and TrueShares Technology 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 TrueShares Technology AI are associated (or correlated) with Barloworld. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barloworld ADR has no effect on the direction of TrueShares Technology i.e., TrueShares Technology and Barloworld go up and down completely randomly.

Pair Corralation between TrueShares Technology and Barloworld

Given the investment horizon of 90 days TrueShares Technology AI is expected to under-perform the Barloworld. But the etf apears to be less risky and, when comparing its historical volatility, TrueShares Technology AI is 1.89 times less risky than Barloworld. The etf trades about -0.06 of its potential returns per unit of risk. The Barloworld Ltd ADR is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  586.00  in Barloworld Ltd ADR on December 23, 2024 and sell it today you would lose (61.00) from holding Barloworld Ltd ADR or give up 10.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.16%
Values	Daily Returns

TrueShares Technology AI  vs.  Barloworld Ltd ADR

TrueShares Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days TrueShares Technology AI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with TrueShares Technology and Barloworld

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

The idea behind TrueShares Technology AI and Barloworld Ltd ADR 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.