Correlation Between Brookfield Real and Investor

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

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

Diversification Opportunities for Brookfield Real and Investor

-0.51

Correlation Coefficient

Brookfield Real  Investor

Excellent diversification

The 3 months correlation between Brookfield and Investor is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Real Assets and Investor AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investor AB and Brookfield Real 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 Brookfield Real Assets are associated (or correlated) with Investor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investor AB has no effect on the direction of Brookfield Real i.e., Brookfield Real and Investor go up and down completely randomly.

Pair Corralation between Brookfield Real and Investor

Allowing for the 90-day total investment horizon Brookfield Real Assets is expected to generate 0.51 times more return on investment than Investor. However, Brookfield Real Assets is 1.97 times less risky than Investor. It trades about 0.13 of its potential returns per unit of risk. Investor AB is currently generating about -0.14 per unit of risk. If you would invest  1,308  in Brookfield Real Assets on October 7, 2024 and sell it today you would earn a total of  34.00  from holding Brookfield Real Assets or generate 2.6% return on investment over 90 days.

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

Brookfield Real Assets  vs.  Investor AB

Brookfield Real Assets

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Real Assets are ranked lower than 2 (%) 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.

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.

Pair Trading with Brookfield Real and Investor

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

The idea behind Brookfield Real Assets and Investor AB 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.