Correlation Between Brookfield and KDA
Can any of the company-specific risk be diversified away by investing in both Brookfield and KDA 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 KDA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookfield and KDA Group, you can compare the effects of market volatilities on Brookfield and KDA 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 KDA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield and KDA.
Diversification Opportunities for Brookfield and KDA
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Brookfield and KDA is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield and KDA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KDA Group 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 KDA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KDA Group has no effect on the direction of Brookfield i.e., Brookfield and KDA go up and down completely randomly.
Pair Corralation between Brookfield and KDA
Assuming the 90 days trading horizon Brookfield is expected to generate 11.31 times less return on investment than KDA. But when comparing it to its historical volatility, Brookfield is 6.1 times less risky than KDA. It trades about 0.04 of its potential returns per unit of risk. KDA Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 9.50 in KDA Group on September 24, 2024 and sell it today you would earn a total of 20.50 from holding KDA Group or generate 215.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Brookfield vs. KDA Group
Performance |
Timeline |
Brookfield |
KDA Group |
Brookfield and KDA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Brookfield and KDA
The main advantage of trading using opposite Brookfield and KDA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield position performs unexpectedly, KDA 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 KDA will offset losses from the drop in KDA's long position.Brookfield vs. Faction Investment Group | Brookfield vs. Royal Bank of | Brookfield vs. Everyday People Financial | Brookfield vs. 2028 Investment Grade |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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