Correlation Between Brimstone Investment and City Lodge
Can any of the company-specific risk be diversified away by investing in both Brimstone Investment and City Lodge 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 Brimstone Investment and City Lodge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brimstone Investment and City Lodge Hotels, you can compare the effects of market volatilities on Brimstone Investment and City Lodge 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 Brimstone Investment with a short position of City Lodge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brimstone Investment and City Lodge.
Diversification Opportunities for Brimstone Investment and City Lodge
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Brimstone and City is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Brimstone Investment and City Lodge Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Lodge Hotels and Brimstone Investment 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 Brimstone Investment are associated (or correlated) with City Lodge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Lodge Hotels has no effect on the direction of Brimstone Investment i.e., Brimstone Investment and City Lodge go up and down completely randomly.
Pair Corralation between Brimstone Investment and City Lodge
Assuming the 90 days trading horizon Brimstone Investment is expected to under-perform the City Lodge. In addition to that, Brimstone Investment is 2.96 times more volatile than City Lodge Hotels. It trades about -0.07 of its total potential returns per unit of risk. City Lodge Hotels is currently generating about 0.01 per unit of volatility. If you would invest 49,000 in City Lodge Hotels on August 27, 2024 and sell it today you would earn a total of 0.00 from holding City Lodge Hotels or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brimstone Investment vs. City Lodge Hotels
Performance |
| Timeline |
| Brimstone Investment |
| City Lodge Hotels |
Brimstone Investment and City Lodge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brimstone Investment and City Lodge
The main advantage of trading using opposite Brimstone Investment and City Lodge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brimstone Investment position performs unexpectedly, City Lodge 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 City Lodge will offset losses from the drop in City Lodge's long position.| Brimstone Investment vs. RCL Foods | Brimstone Investment vs. Oceana | Brimstone Investment vs. Libstar Holdings | Brimstone Investment vs. Brimstone Investment |
| City Lodge vs. Prosus NV | City Lodge vs. Compagnie Financire Richemont | City Lodge vs. British American Tobacco | City Lodge vs. Glencore PLC |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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