Correlation Between Brookfield Asset and CVS HEALTH

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

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

Diversification Opportunities for Brookfield Asset and CVS HEALTH

-0.32

Correlation Coefficient

Brookfield Asset  CVS HEALTH

Very good diversification

The 3 months correlation between Brookfield and CVS is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Asset Management and CVS HEALTH CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS HEALTH CDR and Brookfield Asset 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 Asset Management are associated (or correlated) with CVS HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS HEALTH CDR has no effect on the direction of Brookfield Asset i.e., Brookfield Asset and CVS HEALTH go up and down completely randomly.

Pair Corralation between Brookfield Asset and CVS HEALTH

Assuming the 90 days trading horizon Brookfield Asset Management is expected to under-perform the CVS HEALTH. But the preferred stock apears to be less risky and, when comparing its historical volatility, Brookfield Asset Management is 3.24 times less risky than CVS HEALTH. The preferred stock trades about -0.06 of its potential returns per unit of risk. The CVS HEALTH CDR is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  1,086  in CVS HEALTH CDR on December 23, 2024 and sell it today you would earn a total of  573.00  from holding CVS HEALTH CDR or generate 52.76% return on investment over 90 days.

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

Brookfield Asset Management  vs.  CVS HEALTH CDR

Brookfield Asset Man

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brookfield Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Brookfield Asset is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

CVS HEALTH CDR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CVS HEALTH CDR are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, CVS HEALTH displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brookfield Asset and CVS HEALTH

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

The idea behind Brookfield Asset Management and CVS HEALTH 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 CEOs Directory module to screen CEOs from public companies around the world.