Correlation Between Brompton Lifeco and Goodfellow

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

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

Diversification Opportunities for Brompton Lifeco and Goodfellow

-0.53

Correlation Coefficient

Brompton Lifeco  Goodfellow

Excellent diversification

The 3 months correlation between Brompton and Goodfellow is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Brompton Lifeco Split and Goodfellow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodfellow and Brompton Lifeco 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 Lifeco Split are associated (or correlated) with Goodfellow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodfellow has no effect on the direction of Brompton Lifeco i.e., Brompton Lifeco and Goodfellow go up and down completely randomly.

Pair Corralation between Brompton Lifeco and Goodfellow

Assuming the 90 days trading horizon Brompton Lifeco Split is expected to generate 0.87 times more return on investment than Goodfellow. However, Brompton Lifeco Split is 1.15 times less risky than Goodfellow. It trades about -0.24 of its potential returns per unit of risk. Goodfellow is currently generating about -0.23 per unit of risk. If you would invest  913.00  in Brompton Lifeco Split on October 9, 2024 and sell it today you would lose (69.00) from holding Brompton Lifeco Split or give up 7.56% of portfolio value over 90 days.

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

Brompton Lifeco Split  vs.  Goodfellow

Brompton Lifeco Split

Risk-Adjusted Performance

8 of 100

OK

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

Goodfellow

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goodfellow 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 essential indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Brompton Lifeco and Goodfellow

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

The idea behind Brompton Lifeco Split and Goodfellow 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.