Correlation Between Canso Credit and Brookfield Office

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

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

Diversification Opportunities for Canso Credit and Brookfield Office

0.67

Correlation Coefficient

Canso Credit  Brookfield Office

Poor diversification

The 3 months correlation between Canso and Brookfield is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Canso Credit Trust and Brookfield Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Office and Canso Credit 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 Canso Credit Trust are associated (or correlated) with Brookfield Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Office has no effect on the direction of Canso Credit i.e., Canso Credit and Brookfield Office go up and down completely randomly.

Pair Corralation between Canso Credit and Brookfield Office

Assuming the 90 days trading horizon Canso Credit Trust is expected to generate 0.28 times more return on investment than Brookfield Office. However, Canso Credit Trust is 3.63 times less risky than Brookfield Office. It trades about 0.28 of its potential returns per unit of risk. Brookfield Office Properties is currently generating about -0.12 per unit of risk. If you would invest  1,558  in Canso Credit Trust on October 4, 2024 and sell it today you would earn a total of  37.00  from holding Canso Credit Trust or generate 2.37% return on investment over 90 days.

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

Canso Credit Trust  vs.  Brookfield Office Properties

Canso Credit Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canso Credit Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Canso Credit is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Brookfield Office

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Office Properties are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Brookfield Office is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Canso Credit and Brookfield Office

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

The idea behind Canso Credit Trust and Brookfield Office Properties 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.