Correlation Between First National and Brookfield Asset

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

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

Diversification Opportunities for First National and Brookfield Asset

0.76

Correlation Coefficient

First National  Brookfield Asset

Poor diversification

The 3 months correlation between First and Brookfield is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding First National Financial and Brookfield Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Asset Man and First National 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 National Financial are associated (or correlated) with Brookfield Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Asset Man has no effect on the direction of First National i.e., First National and Brookfield Asset go up and down completely randomly.

Pair Corralation between First National and Brookfield Asset

Assuming the 90 days trading horizon First National Financial is expected to under-perform the Brookfield Asset. In addition to that, First National is 3.26 times more volatile than Brookfield Asset Management. It trades about -0.18 of its total potential returns per unit of risk. Brookfield Asset Management is currently generating about 0.23 per unit of volatility. If you would invest  1,221  in Brookfield Asset Management on October 23, 2024 and sell it today you would earn a total of  27.00  from holding Brookfield Asset Management or generate 2.21% return on investment over 90 days.

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

First National Financial  vs.  Brookfield Asset Management

First National Financial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First National Financial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, First National is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Brookfield Asset Man

Risk-Adjusted Performance

18 of 100

Solid

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

Pair Trading with First National and Brookfield Asset

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

The idea behind First National Financial and Brookfield Asset Management 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.