Correlation Between Brookfield Asset and ExGen Resources

Can any of the company-specific risk be diversified away by investing in both Brookfield Asset and ExGen Resources 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 ExGen Resources 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 ExGen Resources, you can compare the effects of market volatilities on Brookfield Asset and ExGen Resources 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 ExGen Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Asset and ExGen Resources.

Diversification Opportunities for Brookfield Asset and ExGen Resources

-0.29

Correlation Coefficient

Brookfield Asset  ExGen Resources

Very good diversification

The 3 months correlation between Brookfield and ExGen is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Asset Management and ExGen Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ExGen Resources 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 ExGen Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ExGen Resources has no effect on the direction of Brookfield Asset i.e., Brookfield Asset and ExGen Resources go up and down completely randomly.

Pair Corralation between Brookfield Asset and ExGen Resources

Assuming the 90 days trading horizon Brookfield Asset Management is expected to generate 0.08 times more return on investment than ExGen Resources. However, Brookfield Asset Management is 12.63 times less risky than ExGen Resources. It trades about 0.21 of its potential returns per unit of risk. ExGen Resources is currently generating about -0.01 per unit of risk. If you would invest  1,125  in Brookfield Asset Management on October 5, 2024 and sell it today you would earn a total of  102.00  from holding Brookfield Asset Management or generate 9.07% 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.  ExGen Resources

Brookfield Asset Man

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Asset Management are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Brookfield Asset may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ExGen Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ExGen Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, ExGen Resources is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Brookfield Asset and ExGen Resources

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

The idea behind Brookfield Asset Management and ExGen Resources 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.

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 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.