Correlation Between Brookfield Business and Mammoth Energy

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

Diversification Opportunities for Brookfield Business and Mammoth Energy

-0.43

Correlation Coefficient

Brookfield Business  Mammoth Energy

Very good diversification

The 3 months correlation between Brookfield and Mammoth is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Partners and Mammoth Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mammoth Energy Services 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 Mammoth Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mammoth Energy Services has no effect on the direction of Brookfield Business i.e., Brookfield Business and Mammoth Energy go up and down completely randomly.

Pair Corralation between Brookfield Business and Mammoth Energy

Considering the 90-day investment horizon Brookfield Business Partners is expected to generate 0.58 times more return on investment than Mammoth Energy. However, Brookfield Business Partners is 1.71 times less risky than Mammoth Energy. It trades about 0.07 of its potential returns per unit of risk. Mammoth Energy Services is currently generating about -0.09 per unit of risk. If you would invest  2,207  in Brookfield Business Partners on December 30, 2024 and sell it today you would earn a total of  175.00  from holding Brookfield Business Partners or generate 7.93% 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.  Mammoth Energy Services

Brookfield Business

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Business Partners are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, Brookfield Business may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Mammoth Energy Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mammoth Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Brookfield Business and Mammoth Energy

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

The idea behind Brookfield Business Partners and Mammoth Energy Services 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.

Check out your portfolio center.

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.