Correlation Between Brookfield Business and Investcorp Credit

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

Diversification Opportunities for Brookfield Business and Investcorp Credit

0.35

Correlation Coefficient

Brookfield Business  Investcorp Credit

Weak diversification

The 3 months correlation between Brookfield and Investcorp is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Corp and Investcorp Credit Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investcorp Credit 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 Investcorp Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investcorp Credit has no effect on the direction of Brookfield Business i.e., Brookfield Business and Investcorp Credit go up and down completely randomly.

Pair Corralation between Brookfield Business and Investcorp Credit

Given the investment horizon of 90 days Brookfield Business Corp is expected to generate 2.04 times more return on investment than Investcorp Credit. However, Brookfield Business is 2.04 times more volatile than Investcorp Credit Management. It trades about 0.53 of its potential returns per unit of risk. Investcorp Credit Management is currently generating about 0.23 per unit of risk. If you would invest  2,315  in Brookfield Business Corp on December 5, 2024 and sell it today you would earn a total of  413.00  from holding Brookfield Business Corp or generate 17.84% return on investment over 90 days.

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

Brookfield Business Corp  vs.  Investcorp Credit Management

Brookfield Business Corp

Risk-Adjusted Performance

Very 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.

Investcorp Credit

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Investcorp Credit Management are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain primary indicators, Investcorp Credit may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Brookfield Business and Investcorp Credit

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

The idea behind Brookfield Business Corp and Investcorp Credit Management 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.