Correlation Between Brookfield and Financial

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

By analyzing existing cross correlation between Brookfield and Financial 15 Split, you can compare the effects of market volatilities on Brookfield and Financial 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 with a short position of Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield and Financial.

Diversification Opportunities for Brookfield and Financial

0.79

Correlation Coefficient

Brookfield  Financial

Poor diversification

The 3 months correlation between Brookfield and Financial is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield and Financial 15 Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial 15 Split and Brookfield 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 are associated (or correlated) with Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial 15 Split has no effect on the direction of Brookfield i.e., Brookfield and Financial go up and down completely randomly.

Pair Corralation between Brookfield and Financial

Assuming the 90 days trading horizon Brookfield is expected to generate 5.08 times more return on investment than Financial. However, Brookfield is 5.08 times more volatile than Financial 15 Split. It trades about 0.08 of its potential returns per unit of risk. Financial 15 Split is currently generating about 0.31 per unit of risk. If you would invest  2,246  in Brookfield on April 7, 2024 and sell it today you would earn a total of  74.00  from holding Brookfield or generate 3.29% return on investment over 90 days.

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

Brookfield  vs.  Financial 15 Split

Brookfield

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Brookfield may actually be approaching a critical reversion point that can send shares even higher in August 2024.

Financial 15 Split

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Financial 15 Split are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Brookfield and Financial

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

The idea behind Brookfield and Financial 15 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.