Correlation Between Brompton European and Orla Mining

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

Diversification Opportunities for Brompton European and Orla Mining

-0.23

Correlation Coefficient

Brompton European  Orla Mining

Very good diversification

The 3 months correlation between Brompton and Orla is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Brompton European Dividend and Orla Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orla Mining 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 Orla Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orla Mining has no effect on the direction of Brompton European i.e., Brompton European and Orla Mining go up and down completely randomly.

Pair Corralation between Brompton European and Orla Mining

Assuming the 90 days trading horizon Brompton European Dividend is expected to under-perform the Orla Mining. But the etf apears to be less risky and, when comparing its historical volatility, Brompton European Dividend is 1.86 times less risky than Orla Mining. The etf trades about -0.11 of its potential returns per unit of risk. The Orla Mining is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  760.00  in Orla Mining on October 9, 2024 and sell it today you would earn a total of  50.00  from holding Orla Mining or generate 6.58% return on investment over 90 days.

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

Brompton European Dividend  vs.  Orla Mining

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.

Orla Mining

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Orla Mining are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Orla Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brompton European and Orla Mining

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

The idea behind Brompton European Dividend and Orla Mining 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.