Correlation Between Brookfield Business and Seaboard

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

Diversification Opportunities for Brookfield Business and Seaboard

-0.59

Correlation Coefficient

Brookfield Business  Seaboard

Excellent diversification

The 3 months correlation between Brookfield and Seaboard is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Partners and Seaboard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seaboard 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 Seaboard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seaboard has no effect on the direction of Brookfield Business i.e., Brookfield Business and Seaboard go up and down completely randomly.

Pair Corralation between Brookfield Business and Seaboard

Considering the 90-day investment horizon Brookfield Business Partners is expected to generate 1.49 times more return on investment than Seaboard. However, Brookfield Business is 1.49 times more volatile than Seaboard. It trades about 0.21 of its potential returns per unit of risk. Seaboard is currently generating about -0.19 per unit of risk. If you would invest  2,040  in Brookfield Business Partners on August 30, 2024 and sell it today you would earn a total of  568.00  from holding Brookfield Business Partners or generate 27.84% return on investment over 90 days.

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

Brookfield Business Partners  vs.  Seaboard

Brookfield Business

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Business Partners are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, Brookfield Business unveiled solid returns over the last few months and may actually be approaching a breakup point.

Seaboard

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seaboard has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Brookfield Business and Seaboard

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

The idea behind Brookfield Business Partners and Seaboard 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.