Correlation Between Brookfield and Inventronics

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

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

Diversification Opportunities for Brookfield and Inventronics

0.06

Correlation Coefficient

Brookfield  Inventronics

Significant diversification

The 3 months correlation between Brookfield and Inventronics is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield and Inventronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inventronics 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 Inventronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inventronics has no effect on the direction of Brookfield i.e., Brookfield and Inventronics go up and down completely randomly.

Pair Corralation between Brookfield and Inventronics

Assuming the 90 days horizon Brookfield is expected to generate 0.45 times more return on investment than Inventronics. However, Brookfield is 2.23 times less risky than Inventronics. It trades about 0.02 of its potential returns per unit of risk. Inventronics is currently generating about -0.1 per unit of risk. If you would invest  8,289  in Brookfield on December 2, 2024 and sell it today you would earn a total of  83.00  from holding Brookfield or generate 1.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

Brookfield  vs.  Inventronics

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. In spite of very healthy basic indicators, Brookfield is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Inventronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inventronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Brookfield and Inventronics

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

The idea behind Brookfield and Inventronics 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 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.