Correlation Between Brompton North and Harvest Eli
Can any of the company-specific risk be diversified away by investing in both Brompton North and Harvest Eli 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 Brompton North and Harvest Eli into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brompton North American and Harvest Eli Lilly, you can compare the effects of market volatilities on Brompton North and Harvest Eli 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 Brompton North with a short position of Harvest Eli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brompton North and Harvest Eli.
Diversification Opportunities for Brompton North and Harvest Eli
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Brompton and Harvest is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Brompton North American and Harvest Eli Lilly in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Eli Lilly and Brompton North 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 Brompton North American are associated (or correlated) with Harvest Eli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Eli Lilly has no effect on the direction of Brompton North i.e., Brompton North and Harvest Eli go up and down completely randomly.
Pair Corralation between Brompton North and Harvest Eli
Assuming the 90 days trading horizon Brompton North American is expected to generate 0.51 times more return on investment than Harvest Eli. However, Brompton North American is 1.95 times less risky than Harvest Eli. It trades about 0.23 of its potential returns per unit of risk. Harvest Eli Lilly is currently generating about -0.06 per unit of risk. If you would invest 2,400 in Brompton North American on August 31, 2024 and sell it today you would earn a total of 227.00 from holding Brompton North American or generate 9.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brompton North American vs. Harvest Eli Lilly
Performance |
| Timeline |
| Brompton North American |
| Harvest Eli Lilly |
Brompton North and Harvest Eli Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brompton North and Harvest Eli
The main advantage of trading using opposite Brompton North and Harvest Eli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brompton North position performs unexpectedly, Harvest Eli 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 Harvest Eli will offset losses from the drop in Harvest Eli's long position.| Brompton North vs. BMO Canadian Dividend | Brompton North vs. BMO Covered Call | Brompton North vs. BMO Canadian High | Brompton North vs. BMO NASDAQ 100 |
| Harvest Eli vs. Brompton Global Dividend | Harvest Eli vs. Global Healthcare Income | Harvest Eli vs. Tech Leaders Income | Harvest Eli vs. Brompton North American |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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