Correlation Between Brookfield and Baselode Energy

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

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

Diversification Opportunities for Brookfield and Baselode Energy

-0.66

Correlation Coefficient

Brookfield  Baselode Energy

Excellent diversification

The 3 months correlation between Brookfield and Baselode is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield and Baselode Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baselode Energy Corp 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 Baselode Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baselode Energy Corp has no effect on the direction of Brookfield i.e., Brookfield and Baselode Energy go up and down completely randomly.

Pair Corralation between Brookfield and Baselode Energy

Assuming the 90 days trading horizon Brookfield is expected to generate 0.11 times more return on investment than Baselode Energy. However, Brookfield is 9.51 times less risky than Baselode Energy. It trades about 0.14 of its potential returns per unit of risk. Baselode Energy Corp is currently generating about -0.24 per unit of risk. If you would invest  2,351  in Brookfield on September 24, 2024 and sell it today you would earn a total of  38.00  from holding Brookfield or generate 1.62% return on investment over 90 days.

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

Brookfield  vs.  Baselode Energy Corp

Brookfield

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield are ranked lower than 11 (%) 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 current stock price disturbance, may contribute to short-term losses for the investors.

Baselode Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baselode Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Brookfield and Baselode Energy

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

The idea behind Brookfield and Baselode Energy Corp 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.