Correlation Between First Mining and Brookfield Office

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Can any of the company-specific risk be diversified away by investing in both First Mining 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 First Mining and Brookfield Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Mining Gold and Brookfield Office Properties, you can compare the effects of market volatilities on First Mining 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 First Mining with a short position of Brookfield Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Mining and Brookfield Office.

Diversification Opportunities for First Mining and Brookfield Office

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between First and Brookfield is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding First Mining Gold and Brookfield Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Office and First Mining 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 First Mining Gold 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 First Mining i.e., First Mining and Brookfield Office go up and down completely randomly.

Pair Corralation between First Mining and Brookfield Office

Assuming the 90 days horizon First Mining Gold is expected to generate 10.97 times more return on investment than Brookfield Office. However, First Mining is 10.97 times more volatile than Brookfield Office Properties. It trades about 0.11 of its potential returns per unit of risk. Brookfield Office Properties is currently generating about 0.2 per unit of risk. If you would invest  4.06  in First Mining Gold on October 4, 2024 and sell it today you would earn a total of  7.94  from holding First Mining Gold or generate 195.57% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

First Mining Gold  vs.  Brookfield Office Properties

 Performance 
       Timeline  
First Mining Gold 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in First Mining Gold are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, First Mining displayed solid returns over the last few months and may actually be approaching a breakup point.
Brookfield Office 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
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 recent stock price disturbance, may contribute to short-term losses for the investors.

First Mining and Brookfield Office Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with First Mining and Brookfield Office

The main advantage of trading using opposite First Mining and Brookfield Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Mining 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 First Mining Gold 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.
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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