Correlation Between Rubicon Water and Brambles

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

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

Diversification Opportunities for Rubicon Water and Brambles

-0.07

Correlation Coefficient

Rubicon Water  Brambles

Good diversification

The 3 months correlation between Rubicon and Brambles is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Rubicon Water and Brambles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brambles and Rubicon Water 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 Rubicon Water are associated (or correlated) with Brambles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brambles has no effect on the direction of Rubicon Water i.e., Rubicon Water and Brambles go up and down completely randomly.

Pair Corralation between Rubicon Water and Brambles

If you would invest (100.00) in Brambles on October 4, 2024 and sell it today you would earn a total of  100.00  from holding Brambles or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Rubicon Water  vs.  Brambles

Rubicon Water

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rubicon Water are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Rubicon Water unveiled solid returns over the last few months and may actually be approaching a breakup point.

Brambles

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Brambles has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Brambles is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Rubicon Water and Brambles

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

The idea behind Rubicon Water and Brambles 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.

Check out your portfolio center.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.