Correlation Between Brompton European and Eastwood Bio-Medical
Can any of the company-specific risk be diversified away by investing in both Brompton European and Eastwood Bio-Medical 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 Eastwood Bio-Medical 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 Eastwood Bio Medical Canada, you can compare the effects of market volatilities on Brompton European and Eastwood Bio-Medical 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 Eastwood Bio-Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brompton European and Eastwood Bio-Medical.
Diversification Opportunities for Brompton European and Eastwood Bio-Medical
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Brompton and Eastwood is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Brompton European Dividend and Eastwood Bio Medical Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastwood Bio Medical 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 Eastwood Bio-Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastwood Bio Medical has no effect on the direction of Brompton European i.e., Brompton European and Eastwood Bio-Medical go up and down completely randomly.
Pair Corralation between Brompton European and Eastwood Bio-Medical
Assuming the 90 days trading horizon Brompton European is expected to generate 15.5 times less return on investment than Eastwood Bio-Medical. But when comparing it to its historical volatility, Brompton European Dividend is 15.58 times less risky than Eastwood Bio-Medical. It trades about 0.06 of its potential returns per unit of risk. Eastwood Bio Medical Canada is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 80.00 in Eastwood Bio Medical Canada on September 1, 2024 and sell it today you would lose (5.00) from holding Eastwood Bio Medical Canada or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brompton European Dividend vs. Eastwood Bio Medical Canada
Performance |
| Timeline |
| Brompton European |
| Eastwood Bio Medical |
Brompton European and Eastwood Bio-Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brompton European and Eastwood Bio-Medical
The main advantage of trading using opposite Brompton European and Eastwood Bio-Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brompton European position performs unexpectedly, Eastwood Bio-Medical 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 Eastwood Bio-Medical will offset losses from the drop in Eastwood Bio-Medical'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 |
| Eastwood Bio-Medical vs. Covalon Technologies | Eastwood Bio-Medical vs. Sirona Biochem Corp | Eastwood Bio-Medical vs. Arch Biopartners | Eastwood Bio-Medical vs. biOasis Technologies |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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