Correlation Between BHP Group and Fisher Paykel
Can any of the company-specific risk be diversified away by investing in both BHP Group and Fisher Paykel 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 Fisher Paykel 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 Fisher Paykel Healthcare, you can compare the effects of market volatilities on BHP Group and Fisher Paykel 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 Fisher Paykel. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Fisher Paykel.
Diversification Opportunities for BHP Group and Fisher Paykel
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BHP and Fisher is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Fisher Paykel Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fisher Paykel Healthcare 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 Fisher Paykel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fisher Paykel Healthcare has no effect on the direction of BHP Group i.e., BHP Group and Fisher Paykel go up and down completely randomly.
Pair Corralation between BHP Group and Fisher Paykel
Assuming the 90 days trading horizon BHP Group Limited is expected to under-perform the Fisher Paykel. But the stock apears to be less risky and, when comparing its historical volatility, BHP Group Limited is 1.18 times less risky than Fisher Paykel. The stock trades about -0.07 of its potential returns per unit of risk. The Fisher Paykel Healthcare is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,209 in Fisher Paykel Healthcare on September 25, 2024 and sell it today you would earn a total of 207.00 from holding Fisher Paykel Healthcare or generate 6.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
BHP Group Limited vs. Fisher Paykel Healthcare
Performance |
Timeline |
BHP Group Limited |
Fisher Paykel Healthcare |
BHP Group and Fisher Paykel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BHP Group and Fisher Paykel
The main advantage of trading using opposite BHP Group and Fisher Paykel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Fisher Paykel 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 Fisher Paykel will offset losses from the drop in Fisher Paykel's long position.BHP Group vs. Northern Star Resources | BHP Group vs. Evolution Mining | BHP Group vs. Bluescope Steel | BHP Group vs. Aneka Tambang Tbk |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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