Correlation Between Brookfield Asset and Blackstone

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

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

Diversification Opportunities for Brookfield Asset and Blackstone

0.79

Correlation Coefficient

Brookfield Asset  Blackstone

Poor diversification

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

Pair Corralation between Brookfield Asset and Blackstone

Considering the 90-day investment horizon Brookfield Asset Management is expected to generate 1.11 times more return on investment than Blackstone. However, Brookfield Asset is 1.11 times more volatile than Blackstone Group. It trades about -0.06 of its potential returns per unit of risk. Blackstone Group is currently generating about -0.14 per unit of risk. If you would invest  5,416  in Brookfield Asset Management on December 30, 2024 and sell it today you would lose (566.00) from holding Brookfield Asset Management or give up 10.45% of portfolio value over 90 days.

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

Brookfield Asset Management  vs.  Blackstone Group

Brookfield Asset Man

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brookfield Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Blackstone Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackstone Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Brookfield Asset and Blackstone

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

The idea behind Brookfield Asset Management and Blackstone Group 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.