Correlation Between Pace Metals and Brookfield

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

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

Diversification Opportunities for Pace Metals and Brookfield

0.34

Correlation Coefficient

Pace Metals  Brookfield

Weak diversification

The 3 months correlation between Pace and Brookfield is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Pace Metals and Brookfield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield and Pace Metals 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 Pace Metals 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 Pace Metals i.e., Pace Metals and Brookfield go up and down completely randomly.

Pair Corralation between Pace Metals and Brookfield

Assuming the 90 days trading horizon Pace Metals is expected to under-perform the Brookfield. In addition to that, Pace Metals is 4.25 times more volatile than Brookfield. It trades about -0.11 of its total potential returns per unit of risk. Brookfield is currently generating about 0.02 per unit of volatility. If you would invest  1,919  in Brookfield on October 11, 2024 and sell it today you would earn a total of  14.00  from holding Brookfield or generate 0.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Pace Metals  vs.  Brookfield

Pace Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pace Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Brookfield

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Brookfield is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Pace Metals and Brookfield

The main advantage of trading using opposite Pace Metals and Brookfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Metals 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 Pace Metals 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.