Correlation Between DigitalBridge and Brookfield Property

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

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

Diversification Opportunities for DigitalBridge and Brookfield Property

0.9

Correlation Coefficient

DigitalBridge  Brookfield Property

Almost no diversification

The 3 months correlation between DigitalBridge and Brookfield is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding DigitalBridge Group and Brookfield Property Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Property and DigitalBridge 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 DigitalBridge Group are associated (or correlated) with Brookfield Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Property has no effect on the direction of DigitalBridge i.e., DigitalBridge and Brookfield Property go up and down completely randomly.

Pair Corralation between DigitalBridge and Brookfield Property

Assuming the 90 days trading horizon DigitalBridge is expected to generate 2.77 times less return on investment than Brookfield Property. But when comparing it to its historical volatility, DigitalBridge Group is 1.99 times less risky than Brookfield Property. It trades about 0.09 of its potential returns per unit of risk. Brookfield Property Partners is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,271  in Brookfield Property Partners on August 31, 2024 and sell it today you would earn a total of  169.00  from holding Brookfield Property Partners or generate 13.3% return on investment over 90 days.

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

DigitalBridge Group  vs.  Brookfield Property Partners

DigitalBridge Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DigitalBridge Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady forward-looking indicators, DigitalBridge is not utilizing all of its potentials. The recent stock price chaos, may contribute to medium-term losses for the stakeholders.

Brookfield Property

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Property Partners are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Brookfield Property displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DigitalBridge and Brookfield Property

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

The idea behind DigitalBridge Group and Brookfield Property Partners 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.