Correlation Between Brompton North and Picton Mahoney
Can any of the company-specific risk be diversified away by investing in both Brompton North and Picton Mahoney 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 Picton Mahoney 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 Picton Mahoney Fortified, you can compare the effects of market volatilities on Brompton North and Picton Mahoney 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 Picton Mahoney. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brompton North and Picton Mahoney.
Diversification Opportunities for Brompton North and Picton Mahoney
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Brompton and Picton is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Brompton North American and Picton Mahoney Fortified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Picton Mahoney Fortified 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 Picton Mahoney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Picton Mahoney Fortified has no effect on the direction of Brompton North i.e., Brompton North and Picton Mahoney go up and down completely randomly.
Pair Corralation between Brompton North and Picton Mahoney
Assuming the 90 days trading horizon Brompton North American is expected to generate 2.92 times more return on investment than Picton Mahoney. However, Brompton North is 2.92 times more volatile than Picton Mahoney Fortified. It trades about 0.08 of its potential returns per unit of risk. Picton Mahoney Fortified is currently generating about 0.1 per unit of risk. If you would invest 1,757 in Brompton North American on September 3, 2024 and sell it today you would earn a total of 870.00 from holding Brompton North American or generate 49.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brompton North American vs. Picton Mahoney Fortified
Performance |
| Timeline |
| Brompton North American |
| Picton Mahoney Fortified |
Brompton North and Picton Mahoney Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brompton North and Picton Mahoney
The main advantage of trading using opposite Brompton North and Picton Mahoney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brompton North position performs unexpectedly, Picton Mahoney 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 Picton Mahoney will offset losses from the drop in Picton Mahoney'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 |
| Picton Mahoney vs. NBI Liquid Alternatives | Picton Mahoney vs. Picton Mahoney Fortified | Picton Mahoney vs. Picton Mahoney Fortified | Picton Mahoney vs. Picton Mahoney Fortified |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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