Correlation Between Brookfield and NV Gold

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

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

Diversification Opportunities for Brookfield and NV Gold

0.64

Correlation Coefficient

Brookfield  NV Gold

Poor diversification

The 3 months correlation between Brookfield and NVX is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield and NV Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NV Gold 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 NV Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NV Gold Corp has no effect on the direction of Brookfield i.e., Brookfield and NV Gold go up and down completely randomly.

Pair Corralation between Brookfield and NV Gold

Assuming the 90 days trading horizon Brookfield is expected to generate 0.08 times more return on investment than NV Gold. However, Brookfield is 11.83 times less risky than NV Gold. It trades about -0.06 of its potential returns per unit of risk. NV Gold Corp is currently generating about -0.03 per unit of risk. If you would invest  2,449  in Brookfield on December 24, 2024 and sell it today you would lose (49.00) from holding Brookfield or give up 2.0% of portfolio value over 90 days.

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

Brookfield  vs.  NV Gold Corp

Brookfield

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brookfield has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Brookfield is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

NV Gold Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days NV Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal 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 and NV Gold

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

The idea behind Brookfield and NV Gold 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.