Correlation Between Cymbria and Brookfield Office

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

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

Diversification Opportunities for Cymbria and Brookfield Office

0.47

Correlation Coefficient

Cymbria  Brookfield Office

Very weak diversification

The 3 months correlation between Cymbria and Brookfield is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Cymbria and Brookfield Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Office and Cymbria 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 Cymbria are associated (or correlated) with Brookfield Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Office has no effect on the direction of Cymbria i.e., Cymbria and Brookfield Office go up and down completely randomly.

Pair Corralation between Cymbria and Brookfield Office

Assuming the 90 days trading horizon Cymbria is expected to generate 0.5 times more return on investment than Brookfield Office. However, Cymbria is 1.99 times less risky than Brookfield Office. It trades about 0.06 of its potential returns per unit of risk. Brookfield Office Properties is currently generating about 0.01 per unit of risk. If you would invest  5,806  in Cymbria on October 7, 2024 and sell it today you would earn a total of  1,529  from holding Cymbria or generate 26.33% return on investment over 90 days.

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

Cymbria  vs.  Brookfield Office Properties

Cymbria

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cymbria are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, Cymbria is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Brookfield Office

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Office Properties are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Brookfield Office is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cymbria and Brookfield Office

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

The idea behind Cymbria and Brookfield Office Properties 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.