Correlation Between Intel and Brookfield Reinsurance

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

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

Diversification Opportunities for Intel and Brookfield Reinsurance

0.74

Correlation Coefficient

Intel  Brookfield Reinsurance

Poor diversification

The 3 months correlation between Intel and Brookfield is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Brookfield Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Reinsurance and Intel 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 Intel are associated (or correlated) with Brookfield Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Reinsurance has no effect on the direction of Intel i.e., Intel and Brookfield Reinsurance go up and down completely randomly.

Pair Corralation between Intel and Brookfield Reinsurance

Given the investment horizon of 90 days Intel is expected to generate 1.25 times less return on investment than Brookfield Reinsurance. In addition to that, Intel is 1.81 times more volatile than Brookfield Reinsurance. It trades about 0.12 of its total potential returns per unit of risk. Brookfield Reinsurance is currently generating about 0.26 per unit of volatility. If you would invest  4,784  in Brookfield Reinsurance on September 2, 2024 and sell it today you would earn a total of  986.00  from holding Brookfield Reinsurance or generate 20.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	76.56%
Values	Daily Returns

Intel  vs.  Brookfield Reinsurance

Intel

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Intel exhibited solid returns over the last few months and may actually be approaching a breakup point.

Brookfield Reinsurance

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Brookfield Reinsurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unsteady basic indicators, Brookfield Reinsurance exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intel and Brookfield Reinsurance

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

The idea behind Intel and Brookfield Reinsurance 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.