Correlation Between Brookfield Corp and American Express

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

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

Diversification Opportunities for Brookfield Corp and American Express

0.93

Correlation Coefficient

Brookfield Corp  American Express

Almost no diversification

The 3 months correlation between Brookfield and American is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Corp and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and Brookfield Corp 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 Corp are associated (or correlated) with American Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Express has no effect on the direction of Brookfield Corp i.e., Brookfield Corp and American Express go up and down completely randomly.

Pair Corralation between Brookfield Corp and American Express

Allowing for the 90-day total investment horizon Brookfield Corp is expected to generate 1.27 times more return on investment than American Express. However, Brookfield Corp is 1.27 times more volatile than American Express. It trades about -0.06 of its potential returns per unit of risk. American Express is currently generating about -0.1 per unit of risk. If you would invest  5,724  in Brookfield Corp on December 30, 2024 and sell it today you would lose (539.00) from holding Brookfield Corp or give up 9.42% of portfolio value over 90 days.

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

Brookfield Corp  vs.  American Express

Brookfield Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brookfield Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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.

American Express

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Express has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest abnormal performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Brookfield Corp and American Express

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

The idea behind Brookfield Corp and American Express 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.