Correlation Between Brookfield Investments and Golden Pursuit

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

By analyzing existing cross correlation between Brookfield Investments and Golden Pursuit Resources, you can compare the effects of market volatilities on Brookfield Investments and Golden Pursuit 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 Investments with a short position of Golden Pursuit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Investments and Golden Pursuit.

Diversification Opportunities for Brookfield Investments and Golden Pursuit

-0.23

Correlation Coefficient

Brookfield Investments  Golden Pursuit

Very good diversification

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

Pair Corralation between Brookfield Investments and Golden Pursuit

Assuming the 90 days trading horizon Brookfield Investments is expected to generate 53.56 times less return on investment than Golden Pursuit. But when comparing it to its historical volatility, Brookfield Investments is 15.7 times less risky than Golden Pursuit. It trades about 0.01 of its potential returns per unit of risk. Golden Pursuit Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Golden Pursuit Resources on September 27, 2024 and sell it today you would lose (1.00) from holding Golden Pursuit Resources or give up 5.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	52.11%
Values	Daily Returns

Brookfield Investments  vs.  Golden Pursuit Resources

Brookfield Investments

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Investments are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Brookfield Investments is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Golden Pursuit Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Pursuit Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Brookfield Investments and Golden Pursuit

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

The idea behind Brookfield Investments and Golden Pursuit Resources 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.