Correlation Between Ford and Brookfield Asset
Can any of the company-specific risk be diversified away by investing in both Ford and Brookfield Asset 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 Ford and Brookfield Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Brookfield Asset Management, you can compare the effects of market volatilities on Ford and Brookfield Asset 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 Ford with a short position of Brookfield Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Brookfield Asset.
Diversification Opportunities for Ford and Brookfield Asset
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and Brookfield is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Brookfield Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Asset Man and Ford 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 Ford Motor are associated (or correlated) with Brookfield Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Asset Man has no effect on the direction of Ford i.e., Ford and Brookfield Asset go up and down completely randomly.
Pair Corralation between Ford and Brookfield Asset
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Brookfield Asset. In addition to that, Ford is 1.35 times more volatile than Brookfield Asset Management. It trades about -0.17 of its total potential returns per unit of risk. Brookfield Asset Management is currently generating about -0.19 per unit of volatility. If you would invest 4,160 in Brookfield Asset Management on February 3, 2024 and sell it today you would lose (303.00) from holding Brookfield Asset Management or give up 7.28% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Ford Motor vs. Brookfield Asset Management
Performance |
Timeline |
Ford Motor |
Brookfield Asset Man |
Ford and Brookfield Asset Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ford and Brookfield Asset
The main advantage of trading using opposite Ford and Brookfield Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Brookfield Asset 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 Brookfield Asset will offset losses from the drop in Brookfield Asset's long position.The idea behind Ford Motor and Brookfield Asset Management 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.Brookfield Asset vs. New Mountain Finance | Brookfield Asset vs. Carlyle Secured Lending | Brookfield Asset vs. Sixth Street Specialty | Brookfield Asset vs. Gladstone Capital |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Fundamental Analysis View fundamental data based on most recent published financial statements | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |