Correlation Between Brookfield Corp and Portman Ridge

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

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

Diversification Opportunities for Brookfield Corp and Portman Ridge

-0.71

Correlation Coefficient

Brookfield Corp  Portman Ridge

Pay attention - limited upside

The 3 months correlation between Brookfield and Portman is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Corp and Portman Ridge Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Portman Ridge Finance 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 Portman Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Portman Ridge Finance has no effect on the direction of Brookfield Corp i.e., Brookfield Corp and Portman Ridge go up and down completely randomly.

Pair Corralation between Brookfield Corp and Portman Ridge

Allowing for the 90-day total investment horizon Brookfield Corp is expected to generate 1.64 times more return on investment than Portman Ridge. However, Brookfield Corp is 1.64 times more volatile than Portman Ridge Finance. It trades about 0.22 of its potential returns per unit of risk. Portman Ridge Finance is currently generating about -0.08 per unit of risk. If you would invest  4,896  in Brookfield Corp on September 12, 2024 and sell it today you would earn a total of  1,019  from holding Brookfield Corp or generate 20.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Brookfield Corp  vs.  Portman Ridge Finance

Brookfield Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Corp are ranked lower than 17 (%) 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.

Portman Ridge Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Portman Ridge Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Portman Ridge is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Brookfield Corp and Portman Ridge

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

The idea behind Brookfield Corp and Portman Ridge Finance 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.