Correlation Between Brookfield Real and Nuveen SP

Can any of the company-specific risk be diversified away by investing in both Brookfield Real and Nuveen SP 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 Nuveen SP 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 Nuveen SP 500, you can compare the effects of market volatilities on Brookfield Real and Nuveen SP 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 Nuveen SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Real and Nuveen SP.

Diversification Opportunities for Brookfield Real and Nuveen SP

0.86

Correlation Coefficient

Brookfield Real  Nuveen SP

Very poor diversification

The 3 months correlation between Brookfield and Nuveen is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Real Assets and Nuveen SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen SP 500 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 Nuveen SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen SP 500 has no effect on the direction of Brookfield Real i.e., Brookfield Real and Nuveen SP go up and down completely randomly.

Pair Corralation between Brookfield Real and Nuveen SP

Allowing for the 90-day total investment horizon Brookfield Real is expected to generate 6.71 times less return on investment than Nuveen SP. But when comparing it to its historical volatility, Brookfield Real Assets is 1.67 times less risky than Nuveen SP. It trades about 0.03 of its potential returns per unit of risk. Nuveen SP 500 is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,735  in Nuveen SP 500 on December 1, 2024 and sell it today you would earn a total of  103.00  from holding Nuveen SP 500 or generate 5.94% return on investment over 90 days.

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

Brookfield Real Assets  vs.  Nuveen SP 500

Brookfield Real Assets

Risk-Adjusted Performance

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.

Nuveen SP 500

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen SP 500 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Nuveen SP is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Brookfield Real and Nuveen SP

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

The idea behind Brookfield Real Assets and Nuveen SP 500 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.