Correlation Between Brookfield and Pollard Banknote

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

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

Diversification Opportunities for Brookfield and Pollard Banknote

-0.41

Correlation Coefficient

Brookfield  Pollard Banknote

Very good diversification

The 3 months correlation between Brookfield and Pollard is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield and Pollard Banknote Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pollard Banknote 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 Pollard Banknote. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pollard Banknote has no effect on the direction of Brookfield i.e., Brookfield and Pollard Banknote go up and down completely randomly.

Pair Corralation between Brookfield and Pollard Banknote

Assuming the 90 days horizon Brookfield is expected to generate 0.6 times more return on investment than Pollard Banknote. However, Brookfield is 1.68 times less risky than Pollard Banknote. It trades about 0.09 of its potential returns per unit of risk. Pollard Banknote Limited is currently generating about 0.04 per unit of risk. If you would invest  4,264  in Brookfield on October 9, 2024 and sell it today you would earn a total of  3,967  from holding Brookfield or generate 93.03% 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.  Pollard Banknote Limited

Brookfield

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Brookfield displayed solid returns over the last few months and may actually be approaching a breakup point.

Pollard Banknote

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pollard Banknote Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Brookfield and Pollard Banknote

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

The idea behind Brookfield and Pollard Banknote Limited 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.