Correlation Between Alimentation Couchen and Brookfield

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

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

Diversification Opportunities for Alimentation Couchen and Brookfield

0.42

Correlation Coefficient

Alimentation Couchen  Brookfield

Very weak diversification

The 3 months correlation between Alimentation and Brookfield is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Alimentation Couchen Tard and Brookfield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield and Alimentation Couchen 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 Alimentation Couchen Tard are associated (or correlated) with Brookfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield has no effect on the direction of Alimentation Couchen i.e., Alimentation Couchen and Brookfield go up and down completely randomly.

Pair Corralation between Alimentation Couchen and Brookfield

Assuming the 90 days trading horizon Alimentation Couchen is expected to generate 3.06 times less return on investment than Brookfield. In addition to that, Alimentation Couchen is 1.04 times more volatile than Brookfield. It trades about 0.1 of its total potential returns per unit of risk. Brookfield is currently generating about 0.33 per unit of volatility. If you would invest  6,485  in Brookfield on September 1, 2024 and sell it today you would earn a total of  2,119  from holding Brookfield or generate 32.68% return on investment over 90 days.

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

Alimentation Couchen Tard  vs.  Brookfield

Alimentation Couchen Tard

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alimentation Couchen Tard are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, Alimentation Couchen may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Brookfield

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Brookfield displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alimentation Couchen and Brookfield

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

The idea behind Alimentation Couchen Tard and Brookfield 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.