Correlation Between Brookfield Asset and OppFi

Can any of the company-specific risk be diversified away by investing in both Brookfield Asset and OppFi 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 OppFi 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 OppFi Inc, you can compare the effects of market volatilities on Brookfield Asset and OppFi 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 OppFi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Asset and OppFi.

Diversification Opportunities for Brookfield Asset and OppFi

0.8

Correlation Coefficient

Brookfield Asset  OppFi

Very poor diversification

The 3 months correlation between Brookfield and OppFi is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Asset Management and OppFi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OppFi Inc 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 OppFi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OppFi Inc has no effect on the direction of Brookfield Asset i.e., Brookfield Asset and OppFi go up and down completely randomly.

Pair Corralation between Brookfield Asset and OppFi

Considering the 90-day investment horizon Brookfield Asset is expected to generate 1.8 times less return on investment than OppFi. But when comparing it to its historical volatility, Brookfield Asset Management is 3.14 times less risky than OppFi. It trades about 0.39 of its potential returns per unit of risk. OppFi Inc is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  434.00  in OppFi Inc on September 4, 2024 and sell it today you would earn a total of  336.00  from holding OppFi Inc or generate 77.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Brookfield Asset Management  vs.  OppFi Inc

Brookfield Asset Man

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Asset Management are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Brookfield Asset displayed solid returns over the last few months and may actually be approaching a breakup point.

OppFi Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in OppFi Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical and fundamental indicators, OppFi demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brookfield Asset and OppFi

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

The idea behind Brookfield Asset Management and OppFi Inc 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.