Correlation Between Brookfield Asset and Sun Life

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

Diversification Opportunities for Brookfield Asset and Sun Life

0.73

Correlation Coefficient

Brookfield Asset  Sun Life

Poor diversification

The 3 months correlation between Brookfield and Sun is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Asset Management and Sun Life Non in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life Non 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 Sun Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Life Non has no effect on the direction of Brookfield Asset i.e., Brookfield Asset and Sun Life go up and down completely randomly.

Pair Corralation between Brookfield Asset and Sun Life

Assuming the 90 days trading horizon Brookfield Asset Management is expected to generate 0.72 times more return on investment than Sun Life. However, Brookfield Asset Management is 1.38 times less risky than Sun Life. It trades about 0.06 of its potential returns per unit of risk. Sun Life Non is currently generating about 0.02 per unit of risk. If you would invest  1,227  in Brookfield Asset Management on December 2, 2024 and sell it today you would earn a total of  17.00  from holding Brookfield Asset Management or generate 1.39% return on investment over 90 days.

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

Brookfield Asset Management  vs.  Sun Life Non

Brookfield Asset Man

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Asset Management are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Brookfield Asset is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Sun Life Non

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Non are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Sun Life is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Brookfield Asset and Sun Life

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

The idea behind Brookfield Asset Management and Sun Life Non 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.