Correlation Between Barksdale Resources and Megaworld Corp
Can any of the company-specific risk be diversified away by investing in both Barksdale Resources and Megaworld Corp 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 Barksdale Resources and Megaworld Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barksdale Resources Corp and Megaworld Corp ADR, you can compare the effects of market volatilities on Barksdale Resources and Megaworld Corp 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 Barksdale Resources with a short position of Megaworld Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barksdale Resources and Megaworld Corp.
Diversification Opportunities for Barksdale Resources and Megaworld Corp
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barksdale and Megaworld is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Barksdale Resources Corp and Megaworld Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Megaworld Corp ADR and Barksdale Resources 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 Barksdale Resources Corp are associated (or correlated) with Megaworld Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Megaworld Corp ADR has no effect on the direction of Barksdale Resources i.e., Barksdale Resources and Megaworld Corp go up and down completely randomly.
Pair Corralation between Barksdale Resources and Megaworld Corp
Assuming the 90 days horizon Barksdale Resources Corp is expected to under-perform the Megaworld Corp. In addition to that, Barksdale Resources is 2.89 times more volatile than Megaworld Corp ADR. It trades about -0.04 of its total potential returns per unit of risk. Megaworld Corp ADR is currently generating about -0.01 per unit of volatility. If you would invest 715.00 in Megaworld Corp ADR on January 26, 2024 and sell it today you would lose (74.00) from holding Megaworld Corp ADR or give up 10.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barksdale Resources Corp vs. Megaworld Corp ADR
Performance |
| Timeline |
| Barksdale Resources Corp |
| Megaworld Corp ADR |
Barksdale Resources and Megaworld Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barksdale Resources and Megaworld Corp
The main advantage of trading using opposite Barksdale Resources and Megaworld Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barksdale Resources position performs unexpectedly, Megaworld Corp 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 Megaworld Corp will offset losses from the drop in Megaworld Corp's long position.| Barksdale Resources vs. Churchill Resources | Barksdale Resources vs. Western Troy Capital | Barksdale Resources vs. Beyond Minerals | Barksdale Resources vs. Altius Minerals |
| Megaworld Corp vs. BDO Unibank ADR | Megaworld Corp vs. Ayala Corp ADR | Megaworld Corp vs. Alliance Global Group | Megaworld Corp vs. Jollibee Foods Corp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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