Correlation Between Brookfield Business and Falcons Beyond

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

Diversification Opportunities for Brookfield Business and Falcons Beyond

-0.52
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Brookfield and Falcons is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Partners and Falcons Beyond Global, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcons Beyond Global, and Brookfield Business 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 Business Partners are associated (or correlated) with Falcons Beyond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcons Beyond Global, has no effect on the direction of Brookfield Business i.e., Brookfield Business and Falcons Beyond go up and down completely randomly.

Pair Corralation between Brookfield Business and Falcons Beyond

Considering the 90-day investment horizon Brookfield Business is expected to generate 28.1 times less return on investment than Falcons Beyond. But when comparing it to its historical volatility, Brookfield Business Partners is 8.79 times less risky than Falcons Beyond. It trades about 0.03 of its potential returns per unit of risk. Falcons Beyond Global, is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  110.00  in Falcons Beyond Global, on September 20, 2024 and sell it today you would earn a total of  0.00  from holding Falcons Beyond Global, or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy88.89%
ValuesDaily Returns

Brookfield Business Partners  vs.  Falcons Beyond Global,

 Performance 
       Timeline  
Brookfield Business 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Business Partners are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, Brookfield Business is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
Falcons Beyond Global, 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Falcons Beyond Global, are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Falcons Beyond showed solid returns over the last few months and may actually be approaching a breakup point.

Brookfield Business and Falcons Beyond Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Brookfield Business and Falcons Beyond

The main advantage of trading using opposite Brookfield Business and Falcons Beyond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Business position performs unexpectedly, Falcons Beyond 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 Falcons Beyond will offset losses from the drop in Falcons Beyond's long position.
The idea behind Brookfield Business Partners and Falcons Beyond Global, 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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