Correlation Between Brookfield and Sun Peak

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

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

Diversification Opportunities for Brookfield and Sun Peak

0.2

Correlation Coefficient

Brookfield  Sun Peak

Modest diversification

The 3 months correlation between Brookfield and Sun is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield and Sun Peak Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Peak Metals 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 Sun Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Peak Metals has no effect on the direction of Brookfield i.e., Brookfield and Sun Peak go up and down completely randomly.

Pair Corralation between Brookfield and Sun Peak

Assuming the 90 days horizon Brookfield is expected to under-perform the Sun Peak. But the stock apears to be less risky and, when comparing its historical volatility, Brookfield is 2.63 times less risky than Sun Peak. The stock trades about -0.12 of its potential returns per unit of risk. The Sun Peak Metals is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  33.00  in Sun Peak Metals on December 11, 2024 and sell it today you would lose (5.00) from holding Sun Peak Metals or give up 15.15% of portfolio value over 90 days.

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

Brookfield  vs.  Sun Peak Metals

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Sun Peak Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun Peak Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Brookfield and Sun Peak

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

The idea behind Brookfield and Sun Peak Metals 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.