Correlation Between Alimentation Couchen and Brompton Lifeco
Can any of the company-specific risk be diversified away by investing in both Alimentation Couchen and Brompton Lifeco 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 Alimentation Couchen and Brompton Lifeco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alimentation Couchen Tard and Brompton Lifeco Split, you can compare the effects of market volatilities on Alimentation Couchen and Brompton Lifeco 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 Alimentation Couchen with a short position of Brompton Lifeco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alimentation Couchen and Brompton Lifeco.
Diversification Opportunities for Alimentation Couchen and Brompton Lifeco
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alimentation and Brompton is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Alimentation Couchen Tard and Brompton Lifeco Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brompton Lifeco Split and Alimentation Couchen 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 Alimentation Couchen Tard are associated (or correlated) with Brompton Lifeco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brompton Lifeco Split has no effect on the direction of Alimentation Couchen i.e., Alimentation Couchen and Brompton Lifeco go up and down completely randomly.
Pair Corralation between Alimentation Couchen and Brompton Lifeco
Assuming the 90 days trading horizon Alimentation Couchen Tard is expected to under-perform the Brompton Lifeco. But the stock apears to be less risky and, when comparing its historical volatility, Alimentation Couchen Tard is 1.84 times less risky than Brompton Lifeco. The stock trades about -0.22 of its potential returns per unit of risk. The Brompton Lifeco Split is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 832.00 in Brompton Lifeco Split on October 21, 2024 and sell it today you would lose (16.00) from holding Brompton Lifeco Split or give up 1.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alimentation Couchen Tard vs. Brompton Lifeco Split
Performance |
| Timeline |
| Alimentation Couchen Tard |
| Brompton Lifeco Split |
Alimentation Couchen and Brompton Lifeco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alimentation Couchen and Brompton Lifeco
The main advantage of trading using opposite Alimentation Couchen and Brompton Lifeco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alimentation Couchen position performs unexpectedly, Brompton Lifeco 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 Brompton Lifeco will offset losses from the drop in Brompton Lifeco's long position.| Alimentation Couchen vs. Metro Inc | Alimentation Couchen vs. Dollarama | Alimentation Couchen vs. Nutrien | Alimentation Couchen vs. Canadian Pacific Railway |
| Brompton Lifeco vs. Life Banc Split | Brompton Lifeco vs. Brompton Split Banc | Brompton Lifeco vs. Dividend Growth Split | Brompton Lifeco vs. Dividend 15 Split |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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