Correlation Between Brookfield Office and Nano One

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

Diversification Opportunities for Brookfield Office and Nano One

-0.33

Correlation Coefficient

Brookfield Office  Nano One

Very good diversification

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

Pair Corralation between Brookfield Office and Nano One

Assuming the 90 days trading horizon Brookfield Office Properties is expected to generate 0.39 times more return on investment than Nano One. However, Brookfield Office Properties is 2.53 times less risky than Nano One. It trades about 0.01 of its potential returns per unit of risk. Nano One Materials is currently generating about -0.02 per unit of risk. If you would invest  1,667  in Brookfield Office Properties on October 11, 2024 and sell it today you would earn a total of  83.00  from holding Brookfield Office Properties or generate 4.98% return on investment over 90 days.

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

Brookfield Office Properties  vs.  Nano One Materials

Brookfield Office

Risk-Adjusted Performance

7 of 100

OK

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

Nano One Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nano One Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Nano One 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 Nano One

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

The idea behind Brookfield Office Properties and Nano One Materials 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.