Correlation Between Brookfield Corp and Gladstone Investment

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Can any of the company-specific risk be diversified away by investing in both Brookfield Corp and Gladstone Investment 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 Gladstone Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookfield Corp and Gladstone Investment, you can compare the effects of market volatilities on Brookfield Corp and Gladstone Investment 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 Gladstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Corp and Gladstone Investment.

Diversification Opportunities for Brookfield Corp and Gladstone Investment

BrookfieldGladstoneDiversified AwayBrookfieldGladstoneDiversified Away100%
-0.41
  Correlation Coefficient

Very good diversification

The 3 months correlation between Brookfield and Gladstone is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Corp and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment 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 Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of Brookfield Corp i.e., Brookfield Corp and Gladstone Investment go up and down completely randomly.

Pair Corralation between Brookfield Corp and Gladstone Investment

Allowing for the 90-day total investment horizon Brookfield Corp is expected to generate 2.31 times more return on investment than Gladstone Investment. However, Brookfield Corp is 2.31 times more volatile than Gladstone Investment. It trades about 0.08 of its potential returns per unit of risk. Gladstone Investment is currently generating about -0.03 per unit of risk. If you would invest  5,308  in Brookfield Corp on September 30, 2024 and sell it today you would earn a total of  411.00  from holding Brookfield Corp or generate 7.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Brookfield Corp  vs.  Gladstone Investment

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 051015
JavaScript chart by amCharts 3.21.15BN GAINZ
       Timeline  
Brookfield Corp 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Brookfield Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.
JavaScript chart by amCharts 3.21.15NovDecDec525456586062
Gladstone Investment 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Gladstone Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Gladstone Investment is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecDec22.82323.223.423.623.824

Brookfield Corp and Gladstone Investment Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.7-3.52-2.34-1.16-0.01971.182.423.664.896.13 0.20.40.60.8
JavaScript chart by amCharts 3.21.15BN GAINZ
       Returns  

Pair Trading with Brookfield Corp and Gladstone Investment

The main advantage of trading using opposite Brookfield Corp and Gladstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Corp position performs unexpectedly, Gladstone Investment 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 Gladstone Investment will offset losses from the drop in Gladstone Investment's long position.
The idea behind Brookfield Corp and Gladstone Investment 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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