Correlation Between Faction Investment and Brookfield

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

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

Diversification Opportunities for Faction Investment and Brookfield

0.41

Correlation Coefficient

Faction Investment  Brookfield

Very weak diversification

The 3 months correlation between Faction and Brookfield is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Faction Investment Group and Brookfield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield and Faction Investment 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 Faction Investment Group are associated (or correlated) with Brookfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield has no effect on the direction of Faction Investment i.e., Faction Investment and Brookfield go up and down completely randomly.

Pair Corralation between Faction Investment and Brookfield

Assuming the 90 days trading horizon Faction Investment Group is expected to generate 10.68 times more return on investment than Brookfield. However, Faction Investment is 10.68 times more volatile than Brookfield. It trades about 0.03 of its potential returns per unit of risk. Brookfield is currently generating about 0.04 per unit of risk. If you would invest  10.00  in Faction Investment Group on October 12, 2024 and sell it today you would lose (5.00) from holding Faction Investment Group or give up 50.0% of portfolio value over 90 days.

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

Faction Investment Group  vs.  Brookfield

Faction Investment

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Faction Investment Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Faction Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Brookfield

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Brookfield may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Faction Investment and Brookfield

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

The idea behind Faction Investment Group and Brookfield 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..