Correlation Between Brompton European and Canada Rare

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

Diversification Opportunities for Brompton European and Canada Rare

0.0

Correlation Coefficient

Brompton European  Canada Rare

Pay attention - limited upside

The 3 months correlation between Brompton and Canada is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Brompton European Dividend and Canada Rare Earth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canada Rare Earth 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 Canada Rare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canada Rare Earth has no effect on the direction of Brompton European i.e., Brompton European and Canada Rare go up and down completely randomly.

Pair Corralation between Brompton European and Canada Rare

If you would invest  1,031  in Brompton European Dividend on December 22, 2024 and sell it today you would earn a total of  67.00  from holding Brompton European Dividend or generate 6.5% return on investment over 90 days.

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

Brompton European Dividend  vs.  Canada Rare Earth

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.

Canada Rare Earth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canada Rare Earth has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Canada Rare is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Brompton European and Canada Rare

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

The idea behind Brompton European Dividend and Canada Rare Earth 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.