Correlation Between Bowler Metcalf and Brimstone Investment
Can any of the company-specific risk be diversified away by investing in both Bowler Metcalf and Brimstone Investment 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 Bowler Metcalf and Brimstone Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bowler Metcalf and Brimstone Investment, you can compare the effects of market volatilities on Bowler Metcalf and Brimstone Investment 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 Bowler Metcalf with a short position of Brimstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bowler Metcalf and Brimstone Investment.
Diversification Opportunities for Bowler Metcalf and Brimstone Investment
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bowler and Brimstone is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Bowler Metcalf and Brimstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brimstone Investment and Bowler Metcalf 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 Bowler Metcalf are associated (or correlated) with Brimstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brimstone Investment has no effect on the direction of Bowler Metcalf i.e., Bowler Metcalf and Brimstone Investment go up and down completely randomly.
Pair Corralation between Bowler Metcalf and Brimstone Investment
Assuming the 90 days trading horizon Bowler Metcalf is expected to generate 0.37 times more return on investment than Brimstone Investment. However, Bowler Metcalf is 2.68 times less risky than Brimstone Investment. It trades about 0.27 of its potential returns per unit of risk. Brimstone Investment is currently generating about -0.07 per unit of risk. If you would invest 127,000 in Bowler Metcalf on August 27, 2024 and sell it today you would earn a total of 9,900 from holding Bowler Metcalf or generate 7.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bowler Metcalf vs. Brimstone Investment
Performance |
| Timeline |
| Bowler Metcalf |
| Brimstone Investment |
Bowler Metcalf and Brimstone Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bowler Metcalf and Brimstone Investment
The main advantage of trading using opposite Bowler Metcalf and Brimstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bowler Metcalf position performs unexpectedly, Brimstone Investment 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 Brimstone Investment will offset losses from the drop in Brimstone Investment's long position.| Bowler Metcalf vs. Nampak | Bowler Metcalf vs. Sasol Ltd Bee | Bowler Metcalf vs. Growthpoint Properties | Bowler Metcalf vs. AfricaRhodium ETF |
| Brimstone Investment vs. RCL Foods | Brimstone Investment vs. Oceana | Brimstone Investment vs. Libstar Holdings | Brimstone Investment vs. Brimstone Investment |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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