Correlation Between Brompton Lifeco and Western Investment
Can any of the company-specific risk be diversified away by investing in both Brompton Lifeco and Western Investment 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 Lifeco and Western Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brompton Lifeco Split and Western Investment, you can compare the effects of market volatilities on Brompton Lifeco and Western Investment 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 Lifeco with a short position of Western Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brompton Lifeco and Western Investment.
Diversification Opportunities for Brompton Lifeco and Western Investment
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Brompton and Western is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Brompton Lifeco Split and Western Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Investment and Brompton Lifeco 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 Lifeco Split are associated (or correlated) with Western Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Investment has no effect on the direction of Brompton Lifeco i.e., Brompton Lifeco and Western Investment go up and down completely randomly.
Pair Corralation between Brompton Lifeco and Western Investment
Assuming the 90 days trading horizon Brompton Lifeco is expected to generate 2.08 times less return on investment than Western Investment. But when comparing it to its historical volatility, Brompton Lifeco Split is 3.97 times less risky than Western Investment. It trades about 0.25 of its potential returns per unit of risk. Western Investment is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 42.00 in Western Investment on September 13, 2024 and sell it today you would earn a total of 5.00 from holding Western Investment or generate 11.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brompton Lifeco Split vs. Western Investment
Performance |
| Timeline |
| Brompton Lifeco Split |
| Western Investment |
Brompton Lifeco and Western Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brompton Lifeco and Western Investment
The main advantage of trading using opposite Brompton Lifeco and Western Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brompton Lifeco position performs unexpectedly, Western Investment 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 Western Investment will offset losses from the drop in Western Investment's long position.| Brompton Lifeco vs. Life Banc Split | Brompton Lifeco vs. Brompton Split Banc | Brompton Lifeco vs. Dividend Growth Split | Brompton Lifeco vs. Dividend 15 Split |
| Western Investment vs. Westshore Terminals Investment | Western Investment vs. Faction Investment Group | Western Investment vs. Economic Investment Trust | Western Investment vs. CNJ Capital Investments |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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