Correlation Between Rogers Communications and Brookfield

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

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

Diversification Opportunities for Rogers Communications and Brookfield

0.32

Correlation Coefficient

Rogers Communications  Brookfield

Weak diversification

The 3 months correlation between Rogers and Brookfield is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Rogers Communications and Brookfield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield and Rogers Communications 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 Rogers Communications 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 Rogers Communications i.e., Rogers Communications and Brookfield go up and down completely randomly.

Pair Corralation between Rogers Communications and Brookfield

Assuming the 90 days trading horizon Rogers Communications is expected to under-perform the Brookfield. In addition to that, Rogers Communications is 3.78 times more volatile than Brookfield. It trades about -0.08 of its total potential returns per unit of risk. Brookfield is currently generating about -0.04 per unit of volatility. If you would invest  2,430  in Brookfield on December 25, 2024 and sell it today you would lose (30.00) from holding Brookfield or give up 1.23% of portfolio value over 90 days.

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

Rogers Communications  vs.  Brookfield

Rogers Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rogers Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Brookfield

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brookfield has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Brookfield is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rogers Communications and Brookfield

The main advantage of trading using opposite Rogers Communications and Brookfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rogers Communications 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 Rogers Communications 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.