Correlation Between Brookfield Office and Infrastructure Dividend

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

Diversification Opportunities for Brookfield Office and Infrastructure Dividend

0.56

Correlation Coefficient

Brookfield Office  Infrastructure Dividend

Very weak diversification

The 3 months correlation between Brookfield and Infrastructure is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Office Properties and Infrastructure Dividend Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infrastructure Dividend 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 Infrastructure Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infrastructure Dividend has no effect on the direction of Brookfield Office i.e., Brookfield Office and Infrastructure Dividend go up and down completely randomly.

Pair Corralation between Brookfield Office and Infrastructure Dividend

Assuming the 90 days trading horizon Brookfield Office Properties is expected to generate 2.41 times more return on investment than Infrastructure Dividend. However, Brookfield Office is 2.41 times more volatile than Infrastructure Dividend Split. It trades about 0.09 of its potential returns per unit of risk. Infrastructure Dividend Split is currently generating about -0.05 per unit of risk. If you would invest  1,630  in Brookfield Office Properties on September 21, 2024 and sell it today you would earn a total of  40.00  from holding Brookfield Office Properties or generate 2.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Brookfield Office Properties  vs.  Infrastructure Dividend Split

Brookfield Office

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Office Properties are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Brookfield Office may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Infrastructure Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Brookfield Office and Infrastructure Dividend

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

The idea behind Brookfield Office Properties and Infrastructure Dividend Split 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.