Correlation Between Brookfield Corp and Crescent Capital

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

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

Diversification Opportunities for Brookfield Corp and Crescent Capital

0.81

Correlation Coefficient

Brookfield Corp  Crescent Capital

Very poor diversification

The 3 months correlation between Brookfield and Crescent is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Corp and Crescent Capital BDC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crescent Capital BDC 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 Crescent Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crescent Capital BDC has no effect on the direction of Brookfield Corp i.e., Brookfield Corp and Crescent Capital go up and down completely randomly.

Pair Corralation between Brookfield Corp and Crescent Capital

Allowing for the 90-day total investment horizon Brookfield Corp is expected to generate 1.57 times more return on investment than Crescent Capital. However, Brookfield Corp is 1.57 times more volatile than Crescent Capital BDC. It trades about 0.29 of its potential returns per unit of risk. Crescent Capital BDC is currently generating about 0.15 per unit of risk. If you would invest  4,742  in Brookfield Corp on September 4, 2024 and sell it today you would earn a total of  1,409  from holding Brookfield Corp or generate 29.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Brookfield Corp  vs.  Crescent Capital BDC

Brookfield Corp

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Corp are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Brookfield Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Crescent Capital BDC

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Crescent Capital BDC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Crescent Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Brookfield Corp and Crescent Capital

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

The idea behind Brookfield Corp and Crescent Capital BDC 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 Commodity Directory module to find actively traded commodities issued by global exchanges.