Correlation Between Brompton Lifeco and Precious Metals

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

Diversification Opportunities for Brompton Lifeco and Precious Metals

0.0

Correlation Coefficient

Brompton Lifeco  Precious Metals

Pay attention - limited upside

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

Pair Corralation between Brompton Lifeco and Precious Metals

Assuming the 90 days trading horizon Brompton Lifeco is expected to generate 4.69 times less return on investment than Precious Metals. In addition to that, Brompton Lifeco is 1.46 times more volatile than Precious Metals And. It trades about 0.03 of its total potential returns per unit of risk. Precious Metals And is currently generating about 0.2 per unit of volatility. If you would invest  175.00  in Precious Metals And on December 30, 2024 and sell it today you would earn a total of  35.00  from holding Precious Metals And or generate 20.0% return on investment over 90 days.

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

Brompton Lifeco Split  vs.  Precious Metals And

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.

Precious Metals And

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Precious Metals And are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Precious Metals sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brompton Lifeco and Precious Metals

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

The idea behind Brompton Lifeco Split and Precious Metals And 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.