Correlation Between CI Enhanced and Brookfield

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

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

Diversification Opportunities for CI Enhanced and Brookfield

-0.4

Correlation Coefficient

CI Enhanced  Brookfield

Very good diversification

The 3 months correlation between FSB and Brookfield is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding CI Enhanced Short and Brookfield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield and CI Enhanced 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 CI Enhanced Short 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 CI Enhanced i.e., CI Enhanced and Brookfield go up and down completely randomly.

Pair Corralation between CI Enhanced and Brookfield

Assuming the 90 days trading horizon CI Enhanced Short is expected to generate 0.41 times more return on investment than Brookfield. However, CI Enhanced Short is 2.42 times less risky than Brookfield. It trades about 0.08 of its potential returns per unit of risk. Brookfield is currently generating about -0.16 per unit of risk. If you would invest  965.00  in CI Enhanced Short on December 11, 2024 and sell it today you would earn a total of  5.00  from holding CI Enhanced Short or generate 0.52% return on investment over 90 days.

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

CI Enhanced Short  vs.  Brookfield

CI Enhanced Short

Risk-Adjusted Performance

Very Weak

Over the last 90 days CI Enhanced Short has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, CI Enhanced is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Brookfield

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Brookfield is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CI Enhanced and Brookfield

The main advantage of trading using opposite CI Enhanced and Brookfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Enhanced 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 CI Enhanced Short 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.