Correlation Between Brambles and Rubicon Water

Can any of the company-specific risk be diversified away by investing in both Brambles and Rubicon Water 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 Brambles and Rubicon Water into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brambles and Rubicon Water, you can compare the effects of market volatilities on Brambles and Rubicon Water 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 Brambles with a short position of Rubicon Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brambles and Rubicon Water.

Diversification Opportunities for Brambles and Rubicon Water

-0.22

Correlation Coefficient

Brambles  Rubicon Water

Very good diversification

The 3 months correlation between Brambles and Rubicon is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Brambles and Rubicon Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubicon Water and Brambles 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 Brambles are associated (or correlated) with Rubicon Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubicon Water has no effect on the direction of Brambles i.e., Brambles and Rubicon Water go up and down completely randomly.

Pair Corralation between Brambles and Rubicon Water

Assuming the 90 days trading horizon Brambles is expected to under-perform the Rubicon Water. But the stock apears to be less risky and, when comparing its historical volatility, Brambles is 4.69 times less risky than Rubicon Water. The stock trades about -0.09 of its potential returns per unit of risk. The Rubicon Water is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  29.00  in Rubicon Water on October 22, 2024 and sell it today you would earn a total of  5.00  from holding Rubicon Water or generate 17.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Brambles  vs.  Rubicon Water

Brambles

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brambles are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, Brambles is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Rubicon Water

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rubicon Water are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Rubicon Water unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brambles and Rubicon Water

The main advantage of trading using opposite Brambles and Rubicon Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brambles position performs unexpectedly, Rubicon Water 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 Rubicon Water will offset losses from the drop in Rubicon Water's long position.

The idea behind Brambles and Rubicon Water 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.