Correlation Between Brompton North and Mackenzie Global
Can any of the company-specific risk be diversified away by investing in both Brompton North and Mackenzie Global 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 Mackenzie Global 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 Mackenzie Global Sustainable, you can compare the effects of market volatilities on Brompton North and Mackenzie Global 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 Mackenzie Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brompton North and Mackenzie Global.
Diversification Opportunities for Brompton North and Mackenzie Global
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Brompton and Mackenzie is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Brompton North American and Mackenzie Global Sustainable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie Global Sus 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 Mackenzie Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie Global Sus has no effect on the direction of Brompton North i.e., Brompton North and Mackenzie Global go up and down completely randomly.
Pair Corralation between Brompton North and Mackenzie Global
Assuming the 90 days trading horizon Brompton North American is expected to generate 2.02 times more return on investment than Mackenzie Global. However, Brompton North is 2.02 times more volatile than Mackenzie Global Sustainable. It trades about 0.27 of its potential returns per unit of risk. Mackenzie Global Sustainable is currently generating about 0.2 per unit of risk. If you would invest 2,364 in Brompton North American on August 29, 2024 and sell it today you would earn a total of 271.00 from holding Brompton North American or generate 11.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brompton North American vs. Mackenzie Global Sustainable
Performance |
| Timeline |
| Brompton North American |
| Mackenzie Global Sus |
Brompton North and Mackenzie Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brompton North and Mackenzie Global
The main advantage of trading using opposite Brompton North and Mackenzie Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brompton North position performs unexpectedly, Mackenzie Global 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 Mackenzie Global will offset losses from the drop in Mackenzie Global's long position.| Brompton North vs. Brompton Global Dividend | Brompton North vs. Tech Leaders Income | Brompton North vs. Global Healthcare Income | Brompton North vs. Brompton European Dividend |
| Mackenzie Global vs. Global Healthcare Income | Mackenzie Global vs. Tech Leaders Income | Mackenzie Global vs. Brompton North American | Mackenzie Global vs. Brompton European Dividend |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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