Correlation Between Brompton European and Medical Facilities
Can any of the company-specific risk be diversified away by investing in both Brompton European and Medical Facilities 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 Medical Facilities 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 Medical Facilities, you can compare the effects of market volatilities on Brompton European and Medical Facilities 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 Medical Facilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brompton European and Medical Facilities.
Diversification Opportunities for Brompton European and Medical Facilities
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Brompton and Medical is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Brompton European Dividend and Medical Facilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Facilities 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 Medical Facilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Facilities has no effect on the direction of Brompton European i.e., Brompton European and Medical Facilities go up and down completely randomly.
Pair Corralation between Brompton European and Medical Facilities
Assuming the 90 days trading horizon Brompton European Dividend is expected to under-perform the Medical Facilities. But the etf apears to be less risky and, when comparing its historical volatility, Brompton European Dividend is 1.5 times less risky than Medical Facilities. The etf trades about 0.0 of its potential returns per unit of risk. The Medical Facilities is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,442 in Medical Facilities on September 2, 2024 and sell it today you would earn a total of 128.00 from holding Medical Facilities or generate 8.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brompton European Dividend vs. Medical Facilities
Performance |
| Timeline |
| Brompton European |
| Medical Facilities |
Brompton European and Medical Facilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brompton European and Medical Facilities
The main advantage of trading using opposite Brompton European and Medical Facilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brompton European position performs unexpectedly, Medical Facilities 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 Medical Facilities will offset losses from the drop in Medical Facilities' 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 |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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