Correlation Between Data Communications and Brookfield Office

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

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

Diversification Opportunities for Data Communications and Brookfield Office

-0.57

Correlation Coefficient

Data Communications  Brookfield Office

Excellent diversification

The 3 months correlation between Data and Brookfield is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Data Communications Management and Brookfield Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Office and Data Communications 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 Data Communications Management 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 Data Communications i.e., Data Communications and Brookfield Office go up and down completely randomly.

Pair Corralation between Data Communications and Brookfield Office

Assuming the 90 days trading horizon Data Communications Management is expected to generate 4.59 times more return on investment than Brookfield Office. However, Data Communications is 4.59 times more volatile than Brookfield Office Properties. It trades about 0.21 of its potential returns per unit of risk. Brookfield Office Properties is currently generating about 0.29 per unit of risk. If you would invest  177.00  in Data Communications Management on September 22, 2024 and sell it today you would earn a total of  35.00  from holding Data Communications Management or generate 19.77% return on investment over 90 days.

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

Data Communications Management  vs.  Brookfield Office Properties

Data Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Data Communications Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Brookfield Office

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Office Properties are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Brookfield Office sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Data Communications and Brookfield Office

The main advantage of trading using opposite Data Communications and Brookfield Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Data Communications 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 Data Communications Management 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.