Correlation Between Brompton European and Knight Therapeutics
Can any of the company-specific risk be diversified away by investing in both Brompton European and Knight Therapeutics 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 Knight Therapeutics 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 Knight Therapeutics, you can compare the effects of market volatilities on Brompton European and Knight Therapeutics 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 Knight Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brompton European and Knight Therapeutics.
Diversification Opportunities for Brompton European and Knight Therapeutics
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Brompton and Knight is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Brompton European Dividend and Knight Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knight Therapeutics 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 Knight Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knight Therapeutics has no effect on the direction of Brompton European i.e., Brompton European and Knight Therapeutics go up and down completely randomly.
Pair Corralation between Brompton European and Knight Therapeutics
Assuming the 90 days trading horizon Brompton European Dividend is expected to generate 0.55 times more return on investment than Knight Therapeutics. However, Brompton European Dividend is 1.83 times less risky than Knight Therapeutics. It trades about 0.0 of its potential returns per unit of risk. Knight Therapeutics is currently generating about -0.1 per unit of risk. If you would invest 1,075 in Brompton European Dividend on September 2, 2024 and sell it today you would lose (4.00) from holding Brompton European Dividend or give up 0.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brompton European Dividend vs. Knight Therapeutics
Performance |
| Timeline |
| Brompton European |
| Knight Therapeutics |
Brompton European and Knight Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brompton European and Knight Therapeutics
The main advantage of trading using opposite Brompton European and Knight Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brompton European position performs unexpectedly, Knight Therapeutics 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 Knight Therapeutics will offset losses from the drop in Knight Therapeutics' 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 |
| Knight Therapeutics vs. Stella Jones | Knight Therapeutics vs. Richelieu Hardware | Knight Therapeutics vs. Element Fleet Management | Knight Therapeutics vs. ECN Capital Corp |
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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