Correlation Between Brookfield and Apple

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

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

Diversification Opportunities for Brookfield and Apple

-0.19

Correlation Coefficient

Brookfield  Apple

Good diversification

The 3 months correlation between Brookfield and Apple is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield and Apple Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc CDR and Brookfield 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 are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc CDR has no effect on the direction of Brookfield i.e., Brookfield and Apple go up and down completely randomly.

Pair Corralation between Brookfield and Apple

Assuming the 90 days trading horizon Brookfield is expected to under-perform the Apple. But the preferred stock apears to be less risky and, when comparing its historical volatility, Brookfield is 3.16 times less risky than Apple. The preferred stock trades about -0.12 of its potential returns per unit of risk. The Apple Inc CDR is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,469  in Apple Inc CDR on December 1, 2024 and sell it today you would earn a total of  43.00  from holding Apple Inc CDR or generate 1.24% return on investment over 90 days.

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

Brookfield  vs.  Apple Inc CDR

Brookfield

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Brookfield is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Apple Inc CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apple Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Apple is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Brookfield and Apple

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

The idea behind Brookfield and Apple Inc CDR 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.