Correlation Between Nelnet and Brookfield Corp

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

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

Diversification Opportunities for Nelnet and Brookfield Corp

-0.28

Correlation Coefficient

Nelnet  Brookfield Corp

Very good diversification

The 3 months correlation between Nelnet and Brookfield is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Nelnet Inc and Brookfield Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Corp and Nelnet 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 Nelnet Inc are associated (or correlated) with Brookfield Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Corp has no effect on the direction of Nelnet i.e., Nelnet and Brookfield Corp go up and down completely randomly.

Pair Corralation between Nelnet and Brookfield Corp

Considering the 90-day investment horizon Nelnet Inc is expected to generate 0.75 times more return on investment than Brookfield Corp. However, Nelnet Inc is 1.33 times less risky than Brookfield Corp. It trades about 0.09 of its potential returns per unit of risk. Brookfield Corp is currently generating about -0.02 per unit of risk. If you would invest  10,559  in Nelnet Inc on December 20, 2024 and sell it today you would earn a total of  842.00  from holding Nelnet Inc or generate 7.97% return on investment over 90 days.

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

Nelnet Inc  vs.  Brookfield Corp

Nelnet Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nelnet Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Nelnet may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Brookfield Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brookfield Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Brookfield Corp is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nelnet and Brookfield Corp

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

The idea behind Nelnet Inc and Brookfield Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.