Correlation Between Brompton European and Grande Portage

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

Diversification Opportunities for Brompton European and Grande Portage

0.26

Correlation Coefficient

Brompton European  Grande Portage

Modest diversification

The 3 months correlation between Brompton and Grande is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Brompton European Dividend and Grande Portage Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grande Portage Resources 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 Grande Portage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grande Portage Resources has no effect on the direction of Brompton European i.e., Brompton European and Grande Portage go up and down completely randomly.

Pair Corralation between Brompton European and Grande Portage

Assuming the 90 days trading horizon Brompton European is expected to generate 1.24 times less return on investment than Grande Portage. But when comparing it to its historical volatility, Brompton European Dividend is 5.04 times less risky than Grande Portage. It trades about 0.1 of its potential returns per unit of risk. Grande Portage Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  19.00  in Grande Portage Resources on December 23, 2024 and sell it today you would earn a total of  0.00  from holding Grande Portage Resources 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.  Grande Portage Resources

Brompton European

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brompton European Dividend are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Brompton European may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Grande Portage Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grande Portage Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Grande Portage may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Brompton European and Grande Portage

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

The idea behind Brompton European Dividend and Grande Portage Resources 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 Anywhere module to track or share privately all of your investments from the convenience of any device.