Correlation Between Romios Gold and Brookfield

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

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

Diversification Opportunities for Romios Gold and Brookfield

-0.3

Correlation Coefficient

Romios Gold  Brookfield

Very good diversification

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

Pair Corralation between Romios Gold and Brookfield

Given the investment horizon of 90 days Romios Gold Resources is expected to generate 15.11 times more return on investment than Brookfield. However, Romios Gold is 15.11 times more volatile than Brookfield. It trades about 0.1 of its potential returns per unit of risk. Brookfield is currently generating about 0.08 per unit of risk. If you would invest  3.00  in Romios Gold Resources on October 2, 2024 and sell it today you would lose (2.00) from holding Romios Gold Resources or give up 66.67% of portfolio value over 90 days.

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

Romios Gold Resources  vs.  Brookfield

Romios Gold Resources

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Romios Gold Resources are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Romios Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Brookfield

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Brookfield displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Romios Gold and Brookfield

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

The idea behind Romios Gold Resources and Brookfield 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.