Correlation Between Dividend and Brompton Lifeco

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

By analyzing existing cross correlation between Dividend 15 Split and Brompton Lifeco Split, you can compare the effects of market volatilities on Dividend and Brompton Lifeco 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 Dividend with a short position of Brompton Lifeco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dividend and Brompton Lifeco.

Diversification Opportunities for Dividend and Brompton Lifeco

0.2

Correlation Coefficient

Dividend  Brompton Lifeco

Modest diversification

The 3 months correlation between Dividend and Brompton is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Dividend 15 Split and Brompton Lifeco Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brompton Lifeco Split and Dividend 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 Dividend 15 Split are associated (or correlated) with Brompton Lifeco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brompton Lifeco Split has no effect on the direction of Dividend i.e., Dividend and Brompton Lifeco go up and down completely randomly.

Pair Corralation between Dividend and Brompton Lifeco

Assuming the 90 days horizon Dividend 15 Split is expected to under-perform the Brompton Lifeco. But the stock apears to be less risky and, when comparing its historical volatility, Dividend 15 Split is 1.09 times less risky than Brompton Lifeco. The stock trades about -0.06 of its potential returns per unit of risk. The Brompton Lifeco Split is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  839.00  in Brompton Lifeco Split on December 31, 2024 and sell it today you would earn a total of  14.00  from holding Brompton Lifeco Split or generate 1.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Dividend 15 Split  vs.  Brompton Lifeco Split

Dividend 15 Split

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dividend 15 Split has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Brompton Lifeco Split

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brompton Lifeco Split are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Brompton Lifeco is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Dividend and Brompton Lifeco

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

The idea behind Dividend 15 Split and Brompton Lifeco Split 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.