Correlation Between Aquagold International and Brookfield Business

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Can any of the company-specific risk be diversified away by investing in both Aquagold International and Brookfield Business 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 Aquagold International and Brookfield Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aquagold International and Brookfield Business Corp, you can compare the effects of market volatilities on Aquagold International and Brookfield Business 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 Aquagold International with a short position of Brookfield Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and Brookfield Business.

Diversification Opportunities for Aquagold International and Brookfield Business

0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between Aquagold and Brookfield is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Brookfield Business Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Business Corp and Aquagold International 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 Aquagold International are associated (or correlated) with Brookfield Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Business Corp has no effect on the direction of Aquagold International i.e., Aquagold International and Brookfield Business go up and down completely randomly.

Pair Corralation between Aquagold International and Brookfield Business

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Brookfield Business. In addition to that, Aquagold International is 3.62 times more volatile than Brookfield Business Corp. It trades about -0.09 of its total potential returns per unit of risk. Brookfield Business Corp is currently generating about 0.08 per unit of volatility. If you would invest  2,011  in Brookfield Business Corp on September 27, 2024 and sell it today you would earn a total of  429.00  from holding Brookfield Business Corp or generate 21.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.21%
ValuesDaily Returns

Aquagold International  vs.  Brookfield Business Corp

 Performance 
       Timeline  
Aquagold International 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
Brookfield Business Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Brookfield Business Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Brookfield Business is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Aquagold International and Brookfield Business Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aquagold International and Brookfield Business

The main advantage of trading using opposite Aquagold International and Brookfield Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquagold International position performs unexpectedly, Brookfield Business 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 Business will offset losses from the drop in Brookfield Business' long position.
The idea behind Aquagold International and Brookfield Business Corp 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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