Correlation Between East Side and Brookfield Investments

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

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

Diversification Opportunities for East Side and Brookfield Investments

-0.49

Correlation Coefficient

East Side  Brookfield Investments

Very good diversification

The 3 months correlation between East and Brookfield is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding East Side Games and Brookfield Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Investments and East Side 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 East Side Games are associated (or correlated) with Brookfield Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Investments has no effect on the direction of East Side i.e., East Side and Brookfield Investments go up and down completely randomly.

Pair Corralation between East Side and Brookfield Investments

Assuming the 90 days trading horizon East Side Games is expected to under-perform the Brookfield Investments. In addition to that, East Side is 10.0 times more volatile than Brookfield Investments. It trades about -0.06 of its total potential returns per unit of risk. Brookfield Investments is currently generating about 0.02 per unit of volatility. If you would invest  2,520  in Brookfield Investments on October 5, 2024 and sell it today you would earn a total of  5.00  from holding Brookfield Investments or generate 0.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	56.67%
Values	Daily Returns

East Side Games  vs.  Brookfield Investments

East Side Games

Risk-Adjusted Performance

0 of 100

Very Weak

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

Brookfield Investments

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with East Side and Brookfield Investments

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

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