Correlation Between Brookfield Business and Nuveen Senior

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

Diversification Opportunities for Brookfield Business and Nuveen Senior

0.36

Correlation Coefficient

Brookfield Business  Nuveen Senior

Weak diversification

The 3 months correlation between Brookfield and Nuveen is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Corp and Nuveen Senior Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Senior Income 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 Nuveen Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Senior Income has no effect on the direction of Brookfield Business i.e., Brookfield Business and Nuveen Senior go up and down completely randomly.

Pair Corralation between Brookfield Business and Nuveen Senior

If you would invest  2,456  in Brookfield Business Corp on September 5, 2024 and sell it today you would earn a total of  284.00  from holding Brookfield Business Corp or generate 11.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

Brookfield Business Corp  vs.  Nuveen Senior Income

Brookfield Business Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Business Corp are ranked lower than 14 (%) 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.

Nuveen Senior Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen Senior Income has generated negative risk-adjusted returns adding no value to fund investors. Despite quite persistent basic indicators, Nuveen Senior is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Brookfield Business and Nuveen Senior

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

The idea behind Brookfield Business Corp and Nuveen Senior Income 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.