Correlation Between TPG and Brookfield Corp

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

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

Diversification Opportunities for TPG and Brookfield Corp

0.09

Correlation Coefficient

TPG  Brookfield Corp

Significant diversification

The 3 months correlation between TPG and Brookfield is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding TPG Inc and Brookfield Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Corp and TPG 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 TPG Inc are associated (or correlated) with Brookfield Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Corp has no effect on the direction of TPG i.e., TPG and Brookfield Corp go up and down completely randomly.

Pair Corralation between TPG and Brookfield Corp

Considering the 90-day investment horizon TPG Inc is expected to under-perform the Brookfield Corp. In addition to that, TPG is 1.14 times more volatile than Brookfield Corp. It trades about -0.2 of its total potential returns per unit of risk. Brookfield Corp is currently generating about -0.05 per unit of volatility. If you would invest  6,129  in Brookfield Corp on November 27, 2024 and sell it today you would lose (366.00) from holding Brookfield Corp or give up 5.97% of portfolio value over 90 days.

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

TPG Inc  vs.  Brookfield Corp

TPG Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days TPG Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Brookfield Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brookfield Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Brookfield Corp is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with TPG and Brookfield Corp

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

The idea behind TPG Inc and Brookfield Corp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.