Correlation Between Investor and Brookfield Real

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

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

Diversification Opportunities for Investor and Brookfield Real

-0.55

Correlation Coefficient

Investor  Brookfield Real

Excellent diversification

The 3 months correlation between Investor and Brookfield is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB 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 Investor 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 Investor AB 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 Investor i.e., Investor and Brookfield Real go up and down completely randomly.

Pair Corralation between Investor and Brookfield Real

Assuming the 90 days horizon Investor AB is expected to under-perform the Brookfield Real. In addition to that, Investor is 2.09 times more volatile than Brookfield Real Assets. It trades about -0.12 of its total potential returns per unit of risk. Brookfield Real Assets is currently generating about 0.01 per unit of volatility. If you would invest  1,333  in Brookfield Real Assets on October 10, 2024 and sell it today you would earn a total of  3.00  from holding Brookfield Real Assets or generate 0.23% return on investment over 90 days.

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

Investor AB  vs.  Brookfield Real Assets

Investor AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Investor AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Brookfield Real Assets

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Real Assets are ranked lower than 1 (%) 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 Investor and Brookfield Real

The main advantage of trading using opposite Investor and Brookfield Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investor 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 Investor AB 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.

Check out your portfolio center.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.