Correlation Between Brookfield Business and Cardiff Lexington

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

Diversification Opportunities for Brookfield Business and Cardiff Lexington

0.2

Correlation Coefficient

Brookfield Business  Cardiff Lexington

Modest diversification

The 3 months correlation between Brookfield and Cardiff is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Corp and Cardiff Lexington Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardiff Lexington 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 Corp are associated (or correlated) with Cardiff Lexington. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardiff Lexington Corp has no effect on the direction of Brookfield Business i.e., Brookfield Business and Cardiff Lexington go up and down completely randomly.

Pair Corralation between Brookfield Business and Cardiff Lexington

If you would invest  310.00  in Cardiff Lexington Corp on October 20, 2024 and sell it today you would earn a total of  0.00  from holding Cardiff Lexington Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.91%
Values	Daily Returns

Brookfield Business Corp  vs.  Cardiff Lexington Corp

Brookfield Business Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Cardiff Lexington Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cardiff Lexington Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward indicators, Cardiff Lexington showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brookfield Business and Cardiff Lexington

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

The idea behind Brookfield Business Corp and Cardiff Lexington 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.