Correlation Between Brompton Energy and Real Matters

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

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

Diversification Opportunities for Brompton Energy and Real Matters

-0.8

Correlation Coefficient

Brompton Energy  Real Matters

Pay attention - limited upside

The 3 months correlation between Brompton and Real is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Brompton Energy Split and Real Matters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Matters and Brompton Energy 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 Energy Split are associated (or correlated) with Real Matters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Matters has no effect on the direction of Brompton Energy i.e., Brompton Energy and Real Matters go up and down completely randomly.

Pair Corralation between Brompton Energy and Real Matters

Assuming the 90 days trading horizon Brompton Energy Split is expected to under-perform the Real Matters. In addition to that, Brompton Energy is 1.67 times more volatile than Real Matters. It trades about -0.06 of its total potential returns per unit of risk. Real Matters is currently generating about 0.07 per unit of volatility. If you would invest  638.00  in Real Matters on September 23, 2024 and sell it today you would earn a total of  15.00  from holding Real Matters or generate 2.35% return on investment over 90 days.

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

Brompton Energy Split  vs.  Real Matters

Brompton Energy Split

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brompton Energy Split are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Brompton Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Real Matters

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Real Matters has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Brompton Energy and Real Matters

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

The idea behind Brompton Energy Split and Real Matters 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.