Correlation Between Ovintiv and Barloworld

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

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

Diversification Opportunities for Ovintiv and Barloworld

-0.91

Correlation Coefficient

Ovintiv  Barloworld

Pay attention - limited upside

The 3 months correlation between Ovintiv and Barloworld is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Ovintiv and Barloworld Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barloworld ADR and Ovintiv 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 Ovintiv 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 Ovintiv i.e., Ovintiv and Barloworld go up and down completely randomly.

Pair Corralation between Ovintiv and Barloworld

If you would invest  5,147  in Ovintiv on January 20, 2024 and sell it today you would earn a total of  28.00  from holding Ovintiv or generate 0.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Ovintiv  vs.  Barloworld Ltd ADR

Ovintiv

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ovintiv are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Ovintiv showed solid returns over the last few months and may actually be approaching a breakup point.

Barloworld ADR

Risk-Adjusted Performance

0 of 100

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 inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Ovintiv and Barloworld

The main advantage of trading using opposite Ovintiv and Barloworld positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ovintiv 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 Ovintiv 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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.