Correlation Between BHP Group and Cleveland Cliffs
Can any of the company-specific risk be diversified away by investing in both BHP Group and Cleveland Cliffs 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 BHP Group and Cleveland Cliffs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BHP Group Limited and Cleveland Cliffs, you can compare the effects of market volatilities on BHP Group and Cleveland Cliffs 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 BHP Group with a short position of Cleveland Cliffs. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Cleveland Cliffs.
Diversification Opportunities for BHP Group and Cleveland Cliffs
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BHP and Cleveland is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Cleveland Cliffs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleveland Cliffs and BHP Group 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 BHP Group Limited are associated (or correlated) with Cleveland Cliffs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleveland Cliffs has no effect on the direction of BHP Group i.e., BHP Group and Cleveland Cliffs go up and down completely randomly.
Pair Corralation between BHP Group and Cleveland Cliffs
Considering the 90-day investment horizon BHP Group is expected to generate 4.31 times less return on investment than Cleveland Cliffs. But when comparing it to its historical volatility, BHP Group Limited is 1.56 times less risky than Cleveland Cliffs. It trades about 0.05 of its potential returns per unit of risk. Cleveland Cliffs is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,437 in Cleveland Cliffs on January 19, 2024 and sell it today you would earn a total of 646.00 from holding Cleveland Cliffs or generate 44.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Cleveland Cliffs
Performance |
| Timeline |
| BHP Group Limited |
| Cleveland Cliffs |
BHP Group and Cleveland Cliffs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Cleveland Cliffs
The main advantage of trading using opposite BHP Group and Cleveland Cliffs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Cleveland Cliffs 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 Cleveland Cliffs will offset losses from the drop in Cleveland Cliffs' long position.| BHP Group vs. Qubec Nickel Corp | BHP Group vs. American Rare Earths | BHP Group vs. Cypress Development Corp | BHP Group vs. Jervois Mining |
| Cleveland Cliffs vs. Nucor Corp | Cleveland Cliffs vs. Steel Dynamics | Cleveland Cliffs vs. ArcelorMittal SA ADR | Cleveland Cliffs vs. Gerdau SA ADR |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |