Correlation Between Brompton European and European Residential
Can any of the company-specific risk be diversified away by investing in both Brompton European and European Residential 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 European Residential 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 European Residential Real, you can compare the effects of market volatilities on Brompton European and European Residential 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 European Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brompton European and European Residential.
Diversification Opportunities for Brompton European and European Residential
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Brompton and European is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Brompton European Dividend and European Residential Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Residential Real 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 European Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Residential Real has no effect on the direction of Brompton European i.e., Brompton European and European Residential go up and down completely randomly.
Pair Corralation between Brompton European and European Residential
Assuming the 90 days trading horizon Brompton European Dividend is expected to generate 0.09 times more return on investment than European Residential. However, Brompton European Dividend is 10.64 times less risky than European Residential. It trades about 0.1 of its potential returns per unit of risk. European Residential Real is currently generating about -0.1 per unit of risk. If you would invest 1,119 in Brompton European Dividend on August 14, 2025 and sell it today you would earn a total of 51.00 from holding Brompton European Dividend or generate 4.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brompton European Dividend vs. European Residential Real
Performance |
| Timeline |
| Brompton European |
| European Residential Real |
Brompton European and European Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brompton European and European Residential
The main advantage of trading using opposite Brompton European and European Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brompton European position performs unexpectedly, European Residential 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 European Residential will offset losses from the drop in European Residential's long position.| Brompton European vs. RBC Quant European | Brompton European vs. iShares MSCI Min | Brompton European vs. iShares MSCI USA | Brompton European vs. Global Healthcare Income |
| European Residential vs. Invesque | European Residential vs. Canadian Net Real | European Residential vs. True North Commercial | European Residential vs. Parkit Enterprise |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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