Correlation Between Brompton European and North American
Can any of the company-specific risk be diversified away by investing in both Brompton European and North American 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 North American 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 North American Financial, you can compare the effects of market volatilities on Brompton European and North American 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 North American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brompton European and North American.
Diversification Opportunities for Brompton European and North American
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Brompton and North is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Brompton European Dividend and North American Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American Financial 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 North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Financial has no effect on the direction of Brompton European i.e., Brompton European and North American go up and down completely randomly.
Pair Corralation between Brompton European and North American
Assuming the 90 days trading horizon Brompton European Dividend is expected to generate 0.64 times more return on investment than North American. However, Brompton European Dividend is 1.56 times less risky than North American. It trades about 0.22 of its potential returns per unit of risk. North American Financial is currently generating about -0.17 per unit of risk. If you would invest 1,075 in Brompton European Dividend on November 29, 2024 and sell it today you would earn a total of 40.00 from holding Brompton European Dividend or generate 3.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brompton European Dividend vs. North American Financial
Performance |
| Timeline |
| Brompton European |
| North American Financial |
Brompton European and North American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brompton European and North American
The main advantage of trading using opposite Brompton European and North American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brompton European position performs unexpectedly, North American 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 North American will offset losses from the drop in North American'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 |
| North American vs. Dividend Growth Split | North American vs. Dividend 15 Split | North American vs. Financial 15 Split | North American vs. Dividend 15 Split |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |