Correlation Between Brookfield Corp and TPG

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

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

Diversification Opportunities for Brookfield Corp and TPG

0.68

Correlation Coefficient

Brookfield Corp  TPG

Poor diversification

The 3 months correlation between Brookfield and TPG is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Corp and TPG Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG Inc and Brookfield Corp 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 Brookfield Corp are associated (or correlated) with TPG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPG Inc has no effect on the direction of Brookfield Corp i.e., Brookfield Corp and TPG go up and down completely randomly.

Pair Corralation between Brookfield Corp and TPG

Allowing for the 90-day total investment horizon Brookfield Corp is expected to generate 1.32 times more return on investment than TPG. However, Brookfield Corp is 1.32 times more volatile than TPG Inc. It trades about 0.1 of its potential returns per unit of risk. TPG Inc is currently generating about 0.01 per unit of risk. If you would invest  4,010  in Brookfield Corp on February 4, 2024 and sell it today you would earn a total of  155.00  from holding Brookfield Corp or generate 3.87% return on investment over 90 days.

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

Brookfield Corp  vs.  TPG Inc

Brookfield Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Brookfield Corp may actually be approaching a critical reversion point that can send shares even higher in June 2024.

TPG Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TPG Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, TPG may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Brookfield Corp and TPG

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

The idea behind Brookfield Corp and TPG Inc 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.