Correlation Between Brookfield Global and Lycos Energy

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

By analyzing existing cross correlation between Brookfield Global Infrastructure and Lycos Energy, you can compare the effects of market volatilities on Brookfield Global and Lycos Energy 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 Global with a short position of Lycos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Global and Lycos Energy.

Diversification Opportunities for Brookfield Global and Lycos Energy

-0.11

Correlation Coefficient

Brookfield Global  Lycos Energy

Good diversification

The 3 months correlation between Brookfield and Lycos is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Global Infrastructu and Lycos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lycos Energy and Brookfield Global 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 Global Infrastructure are associated (or correlated) with Lycos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lycos Energy has no effect on the direction of Brookfield Global i.e., Brookfield Global and Lycos Energy go up and down completely randomly.

Pair Corralation between Brookfield Global and Lycos Energy

Assuming the 90 days trading horizon Brookfield Global Infrastructure is expected to generate 0.47 times more return on investment than Lycos Energy. However, Brookfield Global Infrastructure is 2.14 times less risky than Lycos Energy. It trades about 0.02 of its potential returns per unit of risk. Lycos Energy is currently generating about -0.06 per unit of risk. If you would invest  510.00  in Brookfield Global Infrastructure on December 24, 2024 and sell it today you would earn a total of  7.00  from holding Brookfield Global Infrastructure or generate 1.37% return on investment over 90 days.

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

Brookfield Global Infrastructu  vs.  Lycos Energy

Brookfield Global

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Global Infrastructure are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Brookfield Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lycos Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lycos Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Brookfield Global and Lycos Energy

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

The idea behind Brookfield Global Infrastructure and Lycos Energy 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.