Correlation Between Brookfield Business and Munivest Fund

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

Diversification Opportunities for Brookfield Business and Munivest Fund

-0.01

Correlation Coefficient

Brookfield Business  Munivest Fund

Good diversification

The 3 months correlation between Brookfield and Munivest is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Corp and Munivest Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Munivest Fund 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 Munivest Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Munivest Fund has no effect on the direction of Brookfield Business i.e., Brookfield Business and Munivest Fund go up and down completely randomly.

Pair Corralation between Brookfield Business and Munivest Fund

Given the investment horizon of 90 days Brookfield Business Corp is expected to generate 3.02 times more return on investment than Munivest Fund. However, Brookfield Business is 3.02 times more volatile than Munivest Fund. It trades about 0.12 of its potential returns per unit of risk. Munivest Fund is currently generating about -0.06 per unit of risk. If you would invest  2,271  in Brookfield Business Corp on September 14, 2024 and sell it today you would earn a total of  336.00  from holding Brookfield Business Corp or generate 14.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Brookfield Business Corp  vs.  Munivest Fund

Brookfield Business Corp

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Business Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Brookfield Business exhibited solid returns over the last few months and may actually be approaching a breakup point.

Munivest Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Munivest Fund has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable basic indicators, Munivest Fund is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Brookfield Business and Munivest Fund

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

The idea behind Brookfield Business Corp and Munivest Fund 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.