Correlation Between Blue Ribbon and Brompton Lifeco

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

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

Diversification Opportunities for Blue Ribbon and Brompton Lifeco

0.3

Correlation Coefficient

Blue Ribbon  Brompton Lifeco

Weak diversification

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

Pair Corralation between Blue Ribbon and Brompton Lifeco

Assuming the 90 days trading horizon Blue Ribbon is expected to generate 9.1 times less return on investment than Brompton Lifeco. But when comparing it to its historical volatility, Blue Ribbon Income is 2.01 times less risky than Brompton Lifeco. It trades about 0.06 of its potential returns per unit of risk. Brompton Lifeco Split is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  769.00  in Brompton Lifeco Split on September 12, 2024 and sell it today you would earn a total of  261.00  from holding Brompton Lifeco Split or generate 33.94% return on investment over 90 days.

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

Blue Ribbon Income  vs.  Brompton Lifeco Split

Blue Ribbon Income

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Ribbon Income are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Blue Ribbon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Brompton Lifeco Split

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brompton Lifeco Split are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Brompton Lifeco displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blue Ribbon and Brompton Lifeco

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

The idea behind Blue Ribbon Income and Brompton Lifeco Split 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..