Correlation Between Brompton European and Accelerate Arbitrage
Can any of the company-specific risk be diversified away by investing in both Brompton European and Accelerate Arbitrage 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 European and Accelerate Arbitrage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brompton European Dividend and Accelerate Arbitrage, you can compare the effects of market volatilities on Brompton European and Accelerate Arbitrage 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 European with a short position of Accelerate Arbitrage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brompton European and Accelerate Arbitrage.
Diversification Opportunities for Brompton European and Accelerate Arbitrage
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Brompton and Accelerate is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Brompton European Dividend and Accelerate Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accelerate Arbitrage and Brompton European 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 European Dividend are associated (or correlated) with Accelerate Arbitrage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accelerate Arbitrage has no effect on the direction of Brompton European i.e., Brompton European and Accelerate Arbitrage go up and down completely randomly.
Pair Corralation between Brompton European and Accelerate Arbitrage
Assuming the 90 days trading horizon Brompton European Dividend is expected to generate 2.48 times more return on investment than Accelerate Arbitrage. However, Brompton European is 2.48 times more volatile than Accelerate Arbitrage. It trades about 0.07 of its potential returns per unit of risk. Accelerate Arbitrage is currently generating about 0.06 per unit of risk. If you would invest 900.00 in Brompton European Dividend on September 2, 2024 and sell it today you would earn a total of 171.00 from holding Brompton European Dividend or generate 19.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.58% |
| Values | Daily Returns |
Brompton European Dividend vs. Accelerate Arbitrage
Performance |
| Timeline |
| Brompton European |
| Accelerate Arbitrage |
Brompton European and Accelerate Arbitrage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brompton European and Accelerate Arbitrage
The main advantage of trading using opposite Brompton European and Accelerate Arbitrage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brompton European position performs unexpectedly, Accelerate Arbitrage 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 Accelerate Arbitrage will offset losses from the drop in Accelerate Arbitrage's long position.| Brompton European vs. Brompton Global Dividend | Brompton European vs. Global Healthcare Income | Brompton European vs. Tech Leaders Income | Brompton European 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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