Correlation Between Brookfield Business and Zeo Energy

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

Diversification Opportunities for Brookfield Business and Zeo Energy

-0.52

Correlation Coefficient

Brookfield Business  Zeo Energy

Excellent diversification

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

Pair Corralation between Brookfield Business and Zeo Energy

Considering the 90-day investment horizon Brookfield Business Partners is expected to under-perform the Zeo Energy. But the stock apears to be less risky and, when comparing its historical volatility, Brookfield Business Partners is 8.57 times less risky than Zeo Energy. The stock trades about -0.03 of its potential returns per unit of risk. The Zeo Energy Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  129.00  in Zeo Energy Corp on November 28, 2024 and sell it today you would earn a total of  85.00  from holding Zeo Energy Corp or generate 65.89% 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.  Zeo Energy Corp

Brookfield Business

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brookfield Business Partners has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Zeo Energy Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zeo Energy Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Zeo Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brookfield Business and Zeo Energy

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

The idea behind Brookfield Business Partners and Zeo Energy Corp 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 Transaction History module to view history of all your transactions and understand their impact on performance.