Correlation Between Highwood Asset and Brompton Lifeco

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

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

Diversification Opportunities for Highwood Asset and Brompton Lifeco

0.3

Correlation Coefficient

Highwood Asset  Brompton Lifeco

Weak diversification

The 3 months correlation between Highwood and Brompton is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Highwood Asset Management and Brompton Lifeco Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brompton Lifeco Split and Highwood Asset 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 Highwood Asset Management are associated (or correlated) with Brompton Lifeco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brompton Lifeco Split has no effect on the direction of Highwood Asset i.e., Highwood Asset and Brompton Lifeco go up and down completely randomly.

Pair Corralation between Highwood Asset and Brompton Lifeco

Assuming the 90 days horizon Highwood Asset is expected to generate 9.56 times less return on investment than Brompton Lifeco. In addition to that, Highwood Asset is 1.0 times more volatile than Brompton Lifeco Split. It trades about 0.0 of its total potential returns per unit of risk. Brompton Lifeco Split is currently generating about 0.03 per unit of volatility. If you would invest  837.00  in Brompton Lifeco Split on December 25, 2024 and sell it today you would earn a total of  20.00  from holding Brompton Lifeco Split or generate 2.39% return on investment over 90 days.

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

Highwood Asset Management  vs.  Brompton Lifeco Split

Highwood Asset Management

Risk-Adjusted Performance

Very Weak

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

Brompton Lifeco Split

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brompton Lifeco Split are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Brompton Lifeco is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Highwood Asset and Brompton Lifeco

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

The idea behind Highwood Asset Management and Brompton Lifeco Split 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.