Correlation Between Brookfield Corp and Hercules Capital
Can any of the company-specific risk be diversified away by investing in both Brookfield Corp and Hercules 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 Hercules 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 Hercules Capital, you can compare the effects of market volatilities on Brookfield Corp and Hercules 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 Hercules Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Corp and Hercules Capital.
Diversification Opportunities for Brookfield Corp and Hercules Capital
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Brookfield and Hercules is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Corp and Hercules Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hercules Capital 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 Hercules Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hercules Capital has no effect on the direction of Brookfield Corp i.e., Brookfield Corp and Hercules Capital go up and down completely randomly.
Pair Corralation between Brookfield Corp and Hercules Capital
Allowing for the 90-day total investment horizon Brookfield Corp is expected to under-perform the Hercules Capital. In addition to that, Brookfield Corp is 1.5 times more volatile than Hercules Capital. It trades about -0.03 of its total potential returns per unit of risk. Hercules Capital is currently generating about -0.02 per unit of volatility. If you would invest 1,964 in Hercules Capital on December 29, 2024 and sell it today you would lose (38.00) from holding Hercules Capital or give up 1.93% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Brookfield Corp vs. Hercules Capital
Performance |
Timeline |
Brookfield Corp |
Hercules Capital |
Brookfield Corp and Hercules Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Brookfield Corp and Hercules Capital
The main advantage of trading using opposite Brookfield Corp and Hercules Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Corp position performs unexpectedly, Hercules 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 Hercules Capital will offset losses from the drop in Hercules Capital's long position.Brookfield Corp vs. Visa Class A | Brookfield Corp vs. Diamond Hill Investment | Brookfield Corp vs. Distoken Acquisition | Brookfield Corp vs. Associated Capital Group |
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Check out your portfolio center.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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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