Correlation Between Brookfield and Sendero Resources

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

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

Diversification Opportunities for Brookfield and Sendero Resources

-0.72

Correlation Coefficient

Brookfield  Sendero Resources

Pay attention - limited upside

The 3 months correlation between Brookfield and Sendero is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield and Sendero Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sendero Resources Corp 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 Sendero Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sendero Resources Corp has no effect on the direction of Brookfield i.e., Brookfield and Sendero Resources go up and down completely randomly.

Pair Corralation between Brookfield and Sendero Resources

Assuming the 90 days horizon Brookfield is expected to generate 0.11 times more return on investment than Sendero Resources. However, Brookfield is 8.77 times less risky than Sendero Resources. It trades about 0.22 of its potential returns per unit of risk. Sendero Resources Corp is currently generating about 0.0 per unit of risk. If you would invest  5,555  in Brookfield on September 19, 2024 and sell it today you would earn a total of  2,889  from holding Brookfield or generate 52.01% return on investment over 90 days.

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

Brookfield  vs.  Sendero Resources Corp

Brookfield

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield are ranked lower than 17 (%) 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.

Sendero Resources Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sendero Resources Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Sendero Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brookfield and Sendero Resources

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

The idea behind Brookfield and Sendero Resources Corp 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.