Correlation Between HYB and Brookfield Real

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

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

Diversification Opportunities for HYB and Brookfield Real

0.07

Correlation Coefficient

HYB  Brookfield Real

Significant diversification

The 3 months correlation between HYB and Brookfield is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding HYB and Brookfield Real Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Real Assets and HYB 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 HYB are associated (or correlated) with Brookfield Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Real Assets has no effect on the direction of HYB i.e., HYB and Brookfield Real go up and down completely randomly.

Pair Corralation between HYB and Brookfield Real

Considering the 90-day investment horizon HYB is expected to generate 1.29 times less return on investment than Brookfield Real. But when comparing it to its historical volatility, HYB is 1.13 times less risky than Brookfield Real. It trades about 0.08 of its potential returns per unit of risk. Brookfield Real Assets is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,294  in Brookfield Real Assets on December 27, 2024 and sell it today you would earn a total of  26.00  from holding Brookfield Real Assets or generate 2.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	63.33%
Values	Daily Returns

HYB  vs.  Brookfield Real Assets

HYB

Risk-Adjusted Performance

Modest

Over the last 90 days HYB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HYB is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Brookfield Real Assets

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Real Assets are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Brookfield Real is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HYB and Brookfield Real

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

The idea behind HYB and Brookfield Real Assets 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.