Correlation Between Brookfield Office and Intact Financial

Can any of the company-specific risk be diversified away by investing in both Brookfield Office and Intact Financial 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 Intact Financial 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 Intact Financial Corp, you can compare the effects of market volatilities on Brookfield Office and Intact Financial 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 Intact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Office and Intact Financial.

Diversification Opportunities for Brookfield Office and Intact Financial

0.33

Correlation Coefficient

Brookfield Office  Intact Financial

Weak diversification

The 3 months correlation between Brookfield and Intact is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Office Properties and Intact Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intact Financial Corp 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 Intact Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intact Financial Corp has no effect on the direction of Brookfield Office i.e., Brookfield Office and Intact Financial go up and down completely randomly.

Pair Corralation between Brookfield Office and Intact Financial

Assuming the 90 days trading horizon Brookfield Office Properties is expected to generate 3.14 times more return on investment than Intact Financial. However, Brookfield Office is 3.14 times more volatile than Intact Financial Corp. It trades about 0.22 of its potential returns per unit of risk. Intact Financial Corp is currently generating about 0.15 per unit of risk. If you would invest  1,686  in Brookfield Office Properties on October 22, 2024 and sell it today you would earn a total of  97.00  from holding Brookfield Office Properties or generate 5.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Brookfield Office Properties  vs.  Intact Financial Corp

Brookfield Office

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Office Properties are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Brookfield Office may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Intact Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intact Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Intact Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Brookfield Office and Intact Financial

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

The idea behind Brookfield Office Properties and Intact Financial Corp 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.