Correlation Between Brookfield Business and BlackRock

Can any of the company-specific risk be diversified away by investing in both Brookfield Business and BlackRock 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 BlackRock into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brookfield Business Corp and BlackRock, you can compare the effects of market volatilities on Brookfield Business and BlackRock 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 BlackRock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Business and BlackRock.

Diversification Opportunities for Brookfield Business and BlackRock

0.37

Correlation Coefficient

Brookfield Business  BlackRock

Weak diversification

The 3 months correlation between Brookfield and BlackRock is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Corp and BlackRock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock 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 Corp are associated (or correlated) with BlackRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock has no effect on the direction of Brookfield Business i.e., Brookfield Business and BlackRock go up and down completely randomly.

Pair Corralation between Brookfield Business and BlackRock

Given the investment horizon of 90 days Brookfield Business Corp is expected to under-perform the BlackRock. In addition to that, Brookfield Business is 2.04 times more volatile than BlackRock. It trades about -0.05 of its total potential returns per unit of risk. BlackRock is currently generating about 0.0 per unit of volatility. If you would invest  102,475  in BlackRock on October 7, 2024 and sell it today you would lose (392.00) from holding BlackRock or give up 0.38% of portfolio value over 90 days.

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

Brookfield Business Corp  vs.  BlackRock

Brookfield Business Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Business Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Brookfield Business is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

BlackRock

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, BlackRock may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Brookfield Business and BlackRock

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

The idea behind Brookfield Business Corp and BlackRock 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.