Correlation Between Brookstone Ultra and Formidable ETF

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

By analyzing existing cross correlation between Brookstone Ultra Short Bond and Formidable ETF, you can compare the effects of market volatilities on Brookstone Ultra and Formidable ETF 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 Brookstone Ultra with a short position of Formidable ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookstone Ultra and Formidable ETF.

Diversification Opportunities for Brookstone Ultra and Formidable ETF

0.86

Correlation Coefficient

Brookstone Ultra  Formidable ETF

Very poor diversification

The 3 months correlation between Brookstone and Formidable is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Brookstone Ultra Short Bond and Formidable ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formidable ETF and Brookstone Ultra 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 Brookstone Ultra Short Bond are associated (or correlated) with Formidable ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formidable ETF has no effect on the direction of Brookstone Ultra i.e., Brookstone Ultra and Formidable ETF go up and down completely randomly.

Pair Corralation between Brookstone Ultra and Formidable ETF

Given the investment horizon of 90 days Brookstone Ultra is expected to generate 22.09 times less return on investment than Formidable ETF. But when comparing it to its historical volatility, Brookstone Ultra Short Bond is 20.61 times less risky than Formidable ETF. It trades about 0.29 of its potential returns per unit of risk. Formidable ETF is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  2,096  in Formidable ETF on April 25, 2025 and sell it today you would earn a total of  300.40  from holding Formidable ETF or generate 14.33% return on investment over 90 days.

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

Brookstone Ultra Short Bond  vs.  Formidable ETF

Brookstone Ultra Short

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brookstone Ultra Short Bond are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, Brookstone Ultra is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Formidable ETF

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Formidable ETF are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Formidable ETF demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brookstone Ultra and Formidable ETF

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

The idea behind Brookstone Ultra Short Bond and Formidable ETF 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.