Correlation Between Brookfield Asset and Brookfield Real

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

Diversification Opportunities for Brookfield Asset and Brookfield Real

0.67

Correlation Coefficient

Brookfield Asset  Brookfield Real

Poor diversification

The 3 months correlation between Brookfield and Brookfield is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Asset Management and Brookfield Real Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Real Assets 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 Brookfield Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Real Assets has no effect on the direction of Brookfield Asset i.e., Brookfield Asset and Brookfield Real go up and down completely randomly.

Pair Corralation between Brookfield Asset and Brookfield Real

Considering the 90-day investment horizon Brookfield Asset Management is expected to generate 5.14 times more return on investment than Brookfield Real. However, Brookfield Asset is 5.14 times more volatile than Brookfield Real Assets. It trades about 0.07 of its potential returns per unit of risk. Brookfield Real Assets is currently generating about 0.08 per unit of risk. If you would invest  5,392  in Brookfield Asset Management on December 2, 2024 and sell it today you would earn a total of  266.00  from holding Brookfield Asset Management or generate 4.93% return on investment over 90 days.

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

Brookfield Asset Management  vs.  Brookfield Real Assets

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 very healthy basic indicators, Brookfield Asset is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Brookfield Real Assets

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Real Assets are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Brookfield Real 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 Asset and Brookfield Real

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

The idea behind Brookfield Asset Management and Brookfield Real Assets 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.