Correlation Between Chemtrade Logistics and Brookfield Asset

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

By analyzing existing cross correlation between Chemtrade Logistics Income and Brookfield Asset Management, you can compare the effects of market volatilities on Chemtrade Logistics and Brookfield Asset 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 Chemtrade Logistics with a short position of Brookfield Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemtrade Logistics and Brookfield Asset.

Diversification Opportunities for Chemtrade Logistics and Brookfield Asset

-0.18

Correlation Coefficient

Chemtrade Logistics  Brookfield Asset

Good diversification

The 3 months correlation between Chemtrade and Brookfield is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Chemtrade Logistics Income and Brookfield Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Asset Man and Chemtrade Logistics 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 Chemtrade Logistics Income are associated (or correlated) with Brookfield Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Asset Man has no effect on the direction of Chemtrade Logistics i.e., Chemtrade Logistics and Brookfield Asset go up and down completely randomly.

Pair Corralation between Chemtrade Logistics and Brookfield Asset

Assuming the 90 days trading horizon Chemtrade Logistics Income is expected to under-perform the Brookfield Asset. In addition to that, Chemtrade Logistics is 1.99 times more volatile than Brookfield Asset Management. It trades about -0.01 of its total potential returns per unit of risk. Brookfield Asset Management is currently generating about 0.23 per unit of volatility. If you would invest  1,134  in Brookfield Asset Management on October 27, 2024 and sell it today you would earn a total of  121.00  from holding Brookfield Asset Management or generate 10.67% return on investment over 90 days.

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

Chemtrade Logistics Income  vs.  Brookfield Asset Management

Chemtrade Logistics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Brookfield Asset Man

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Asset Management are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Brookfield Asset may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Chemtrade Logistics and Brookfield Asset

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

The idea behind Chemtrade Logistics Income and Brookfield Asset Management 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.