Correlation Between Sofina Socit and Brookfield Asset

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

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

Diversification Opportunities for Sofina Socit and Brookfield Asset

-0.75

Correlation Coefficient

Sofina Socit  Brookfield Asset

Pay attention - limited upside

The 3 months correlation between Sofina and Brookfield is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Sofina Socit Anonyme and Brookfield Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Asset Man and Sofina Socit 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 Sofina Socit Anonyme are associated (or correlated) with Brookfield Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Asset Man has no effect on the direction of Sofina Socit i.e., Sofina Socit and Brookfield Asset go up and down completely randomly.

Pair Corralation between Sofina Socit and Brookfield Asset

Assuming the 90 days horizon Sofina Socit Anonyme is not expected to generate positive returns. However, Sofina Socit Anonyme is 19.57 times less risky than Brookfield Asset. It waists most of its returns potential to compensate for thr risk taken. Brookfield Asset is generating about 0.17 per unit of risk. If you would invest  4,672  in Brookfield Asset Management on October 8, 2024 and sell it today you would earn a total of  809.00  from holding Brookfield Asset Management or generate 17.32% return on investment over 90 days.

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

Sofina Socit Anonyme  vs.  Brookfield Asset Management

Sofina Socit Anonyme

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sofina Socit Anonyme has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sofina Socit is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Brookfield Asset Man

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Asset Management are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Brookfield Asset displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sofina Socit and Brookfield Asset

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

The idea behind Sofina Socit Anonyme and Brookfield Asset Management 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.