Correlation Between Brookfield Corp and Carlyle

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

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

Diversification Opportunities for Brookfield Corp and Carlyle

0.9

Correlation Coefficient

Brookfield Corp  Carlyle

Almost no diversification

The 3 months correlation between Brookfield and Carlyle is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Corp and Carlyle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlyle Group 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 Carlyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlyle Group has no effect on the direction of Brookfield Corp i.e., Brookfield Corp and Carlyle go up and down completely randomly.

Pair Corralation between Brookfield Corp and Carlyle

Allowing for the 90-day total investment horizon Brookfield Corp is expected to generate 0.79 times more return on investment than Carlyle. However, Brookfield Corp is 1.27 times less risky than Carlyle. It trades about -0.03 of its potential returns per unit of risk. Carlyle Group is currently generating about -0.08 per unit of risk. If you would invest  5,724  in Brookfield Corp on December 29, 2024 and sell it today you would lose (310.00) from holding Brookfield Corp or give up 5.42% 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.  Carlyle Group

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 very healthy basic indicators, Brookfield Corp is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Carlyle Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carlyle Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Brookfield Corp and Carlyle

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

The idea behind Brookfield Corp and Carlyle Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.