Correlation Between Brookfield Office and Environmental Waste

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

By analyzing existing cross correlation between Brookfield Office Properties and Environmental Waste International, you can compare the effects of market volatilities on Brookfield Office and Environmental Waste 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 Office with a short position of Environmental Waste. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Office and Environmental Waste.

Diversification Opportunities for Brookfield Office and Environmental Waste

-0.23

Correlation Coefficient

Brookfield Office  Environmental Waste

Very good diversification

The 3 months correlation between Brookfield and Environmental is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Office Properties and Environmental Waste Internatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Environmental Waste and Brookfield Office 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 Office Properties are associated (or correlated) with Environmental Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Environmental Waste has no effect on the direction of Brookfield Office i.e., Brookfield Office and Environmental Waste go up and down completely randomly.

Pair Corralation between Brookfield Office and Environmental Waste

Assuming the 90 days trading horizon Brookfield Office is expected to generate 10.97 times less return on investment than Environmental Waste. But when comparing it to its historical volatility, Brookfield Office Properties is 16.86 times less risky than Environmental Waste. It trades about 0.14 of its potential returns per unit of risk. Environmental Waste International is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Environmental Waste International on September 13, 2024 and sell it today you would lose (1.00) from holding Environmental Waste International or give up 50.0% of portfolio value over 90 days.

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

Brookfield Office Properties  vs.  Environmental Waste Internatio

Brookfield Office

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Office Properties are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Brookfield Office sustained solid returns over the last few months and may actually be approaching a breakup point.

Environmental Waste

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Environmental Waste International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Environmental Waste is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Brookfield Office and Environmental Waste

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

The idea behind Brookfield Office Properties and Environmental Waste International 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.