Correlation Between Brompton European and Clear Blue

Can any of the company-specific risk be diversified away by investing in both Brompton European and Clear Blue 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 Clear Blue 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 Clear Blue Technologies, you can compare the effects of market volatilities on Brompton European and Clear Blue 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 Clear Blue. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brompton European and Clear Blue.

Diversification Opportunities for Brompton European and Clear Blue

0.36

Correlation Coefficient

Brompton European  Clear Blue

Weak diversification

The 3 months correlation between Brompton and Clear is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Brompton European Dividend and Clear Blue Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clear Blue Technologies 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 Clear Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clear Blue Technologies has no effect on the direction of Brompton European i.e., Brompton European and Clear Blue go up and down completely randomly.

Pair Corralation between Brompton European and Clear Blue

Assuming the 90 days trading horizon Brompton European Dividend is expected to under-perform the Clear Blue. But the etf apears to be less risky and, when comparing its historical volatility, Brompton European Dividend is 6.69 times less risky than Clear Blue. The etf trades about -0.11 of its potential returns per unit of risk. The Clear Blue Technologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Clear Blue Technologies on October 8, 2024 and sell it today you would earn a total of  0.00  from holding Clear Blue Technologies or generate 0.0% return on investment over 90 days.

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

Brompton European Dividend  vs.  Clear Blue Technologies

Brompton European

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brompton European Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Brompton European is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Clear Blue Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clear Blue Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's essential indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Brompton European and Clear Blue

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

The idea behind Brompton European Dividend and Clear Blue Technologies 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.