Correlation Between Brookfield Investments and Partners Value

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

By analyzing existing cross correlation between Brookfield Investments and Partners Value Investments, you can compare the effects of market volatilities on Brookfield Investments and Partners Value 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 Partners Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Investments and Partners Value.

Diversification Opportunities for Brookfield Investments and Partners Value

0.08

Correlation Coefficient

Brookfield Investments  Partners Value

Significant diversification

The 3 months correlation between Brookfield and Partners is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Investments and Partners Value Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Partners Value Inves 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 Partners Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Partners Value Inves has no effect on the direction of Brookfield Investments i.e., Brookfield Investments and Partners Value go up and down completely randomly.

Pair Corralation between Brookfield Investments and Partners Value

Assuming the 90 days trading horizon Brookfield Investments is expected to generate 0.35 times more return on investment than Partners Value. However, Brookfield Investments is 2.87 times less risky than Partners Value. It trades about -0.01 of its potential returns per unit of risk. Partners Value Investments is currently generating about -0.03 per unit of risk. If you would invest  2,525  in Brookfield Investments on December 28, 2024 and sell it today you would lose (12.00) from holding Brookfield Investments or give up 0.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	53.23%
Values	Daily Returns

Brookfield Investments  vs.  Partners Value Investments

Brookfield Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brookfield Investments has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Partners Value Inves

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Brookfield Investments and Partners Value

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

The idea behind Brookfield Investments and Partners Value Investments 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.