Correlation Between ClearShares OCIO and Brookstone Opportunities

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Can any of the company-specific risk be diversified away by investing in both ClearShares OCIO and Brookstone Opportunities 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 ClearShares OCIO and Brookstone Opportunities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ClearShares OCIO ETF and Brookstone Opportunities ETF, you can compare the effects of market volatilities on ClearShares OCIO and Brookstone Opportunities 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 ClearShares OCIO with a short position of Brookstone Opportunities. Check out your portfolio center. Please also check ongoing floating volatility patterns of ClearShares OCIO and Brookstone Opportunities.

Diversification Opportunities for ClearShares OCIO and Brookstone Opportunities

0.95
  Correlation Coefficient

Almost no diversification

The 3 months correlation between ClearShares and Brookstone is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding ClearShares OCIO ETF and Brookstone Opportunities ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookstone Opportunities and ClearShares OCIO 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 ClearShares OCIO ETF are associated (or correlated) with Brookstone Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookstone Opportunities has no effect on the direction of ClearShares OCIO i.e., ClearShares OCIO and Brookstone Opportunities go up and down completely randomly.

Pair Corralation between ClearShares OCIO and Brookstone Opportunities

Given the investment horizon of 90 days ClearShares OCIO ETF is expected to generate 1.05 times more return on investment than Brookstone Opportunities. However, ClearShares OCIO is 1.05 times more volatile than Brookstone Opportunities ETF. It trades about 0.06 of its potential returns per unit of risk. Brookstone Opportunities ETF is currently generating about 0.05 per unit of risk. If you would invest  3,394  in ClearShares OCIO ETF on December 2, 2024 and sell it today you would earn a total of  51.00  from holding ClearShares OCIO ETF or generate 1.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

ClearShares OCIO ETF  vs.  Brookstone Opportunities ETF

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10123
JavaScript chart by amCharts 3.21.15OCIO BAMO
       Timeline  
ClearShares OCIO ETF 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days ClearShares OCIO ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, ClearShares OCIO is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15JanFebFebMar3434.535
Brookstone Opportunities 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Brookstone Opportunities ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Brookstone Opportunities is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15JanFebFebMar30.230.430.630.83131.231.4

ClearShares OCIO and Brookstone Opportunities Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.9-1.42-0.94-0.46-0.0079610.420.91.381.862.34 0.20.40.60.81.01.2
JavaScript chart by amCharts 3.21.15OCIO BAMO
       Returns  

Pair Trading with ClearShares OCIO and Brookstone Opportunities

The main advantage of trading using opposite ClearShares OCIO and Brookstone Opportunities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ClearShares OCIO position performs unexpectedly, Brookstone Opportunities 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 Brookstone Opportunities will offset losses from the drop in Brookstone Opportunities' long position.
The idea behind ClearShares OCIO ETF and Brookstone Opportunities ETF pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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