Correlation Between Brookfield Corp and Silvercrest Asset

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

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

Diversification Opportunities for Brookfield Corp and Silvercrest Asset

0.75

Correlation Coefficient

Brookfield Corp  Silvercrest Asset

Poor diversification

The 3 months correlation between Brookfield and Silvercrest is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Corp and Silvercrest Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvercrest Asset 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 Silvercrest Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silvercrest Asset has no effect on the direction of Brookfield Corp i.e., Brookfield Corp and Silvercrest Asset go up and down completely randomly.

Pair Corralation between Brookfield Corp and Silvercrest Asset

Allowing for the 90-day total investment horizon Brookfield Corp is expected to generate 1.12 times less return on investment than Silvercrest Asset. But when comparing it to its historical volatility, Brookfield Corp is 1.33 times less risky than Silvercrest Asset. It trades about 0.11 of its potential returns per unit of risk. Silvercrest Asset Management is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,642  in Silvercrest Asset Management on October 8, 2024 and sell it today you would earn a total of  186.00  from holding Silvercrest Asset Management or generate 11.33% return on investment over 90 days.

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

Brookfield Corp  vs.  Silvercrest Asset Management

Brookfield Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Brookfield Corp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Silvercrest Asset

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Silvercrest Asset Management are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak primary indicators, Silvercrest Asset may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Brookfield Corp and Silvercrest Asset

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

The idea behind Brookfield Corp and Silvercrest Asset Management 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.