Correlation Between Brookfield and Metro

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

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

Diversification Opportunities for Brookfield and Metro

-0.5

Correlation Coefficient

Brookfield  Metro

Very good diversification

The 3 months correlation between Brookfield and Metro is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield and Metro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Inc 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 Metro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Inc has no effect on the direction of Brookfield i.e., Brookfield and Metro go up and down completely randomly.

Pair Corralation between Brookfield and Metro

Assuming the 90 days horizon Brookfield is expected to under-perform the Metro. In addition to that, Brookfield is 1.91 times more volatile than Metro Inc. It trades about -0.07 of its total potential returns per unit of risk. Metro Inc is currently generating about 0.13 per unit of volatility. If you would invest  8,994  in Metro Inc on December 30, 2024 and sell it today you would earn a total of  781.00  from holding Metro Inc or generate 8.68% return on investment over 90 days.

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

Brookfield  vs.  Metro Inc

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 latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Metro Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Metro Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Metro may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Brookfield and Metro

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

The idea behind Brookfield and Metro Inc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.