Correlation Between Brompton European and CI Global

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

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

Diversification Opportunities for Brompton European and CI Global

0.29

Correlation Coefficient

Brompton European  CI Global

Modest diversification

The 3 months correlation between Brompton and 0P000070I2 is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Brompton European Dividend and CI Global Resource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Global Resource and Brompton European 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 European Dividend are associated (or correlated) with CI Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Global Resource has no effect on the direction of Brompton European i.e., Brompton European and CI Global go up and down completely randomly.

Pair Corralation between Brompton European and CI Global

Assuming the 90 days trading horizon Brompton European is expected to generate 9.95 times less return on investment than CI Global. In addition to that, Brompton European is 1.25 times more volatile than CI Global Resource. It trades about 0.01 of its total potential returns per unit of risk. CI Global Resource is currently generating about 0.1 per unit of volatility. If you would invest  2,812  in CI Global Resource on September 13, 2024 and sell it today you would earn a total of  181.00  from holding CI Global Resource or generate 6.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Brompton European Dividend  vs.  CI Global Resource

Brompton European

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Brompton European Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Brompton European is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

CI Global Resource

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CI Global Resource are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, CI Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Brompton European and CI Global

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

The idea behind Brompton European Dividend and CI Global Resource 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.