Correlation Between Brompton European and IShares Flexible
Can any of the company-specific risk be diversified away by investing in both Brompton European and IShares Flexible 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 IShares Flexible 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 iShares Flexible Monthly, you can compare the effects of market volatilities on Brompton European and IShares Flexible 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 IShares Flexible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brompton European and IShares Flexible.
Diversification Opportunities for Brompton European and IShares Flexible
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Brompton and IShares is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Brompton European Dividend and iShares Flexible Monthly in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Flexible Monthly 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 IShares Flexible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Flexible Monthly has no effect on the direction of Brompton European i.e., Brompton European and IShares Flexible go up and down completely randomly.
Pair Corralation between Brompton European and IShares Flexible
Assuming the 90 days trading horizon Brompton European Dividend is expected to under-perform the IShares Flexible. In addition to that, Brompton European is 8.94 times more volatile than iShares Flexible Monthly. It trades about -0.02 of its total potential returns per unit of risk. iShares Flexible Monthly is currently generating about -0.06 per unit of volatility. If you would invest 3,967 in iShares Flexible Monthly on August 29, 2024 and sell it today you would lose (10.00) from holding iShares Flexible Monthly or give up 0.25% 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. iShares Flexible Monthly
Performance |
| Timeline |
| Brompton European |
| iShares Flexible Monthly |
Brompton European and IShares Flexible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brompton European and IShares Flexible
The main advantage of trading using opposite Brompton European and IShares Flexible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brompton European position performs unexpectedly, IShares Flexible 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 IShares Flexible will offset losses from the drop in IShares Flexible's long position.| Brompton European vs. iShares SPTSX 60 | Brompton European vs. iShares Core SP | Brompton European vs. iShares Core SPTSX | Brompton European vs. BMO Aggregate Bond |
| IShares Flexible vs. iShares Convertible Bond | IShares Flexible vs. iShares SP Mid Cap | IShares Flexible vs. iShares Edge MSCI | IShares Flexible vs. iShares Core Canadian |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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