Correlation Between Vecima Networks and Brookfield

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

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

Diversification Opportunities for Vecima Networks and Brookfield

-0.92

Correlation Coefficient

Vecima Networks  Brookfield

Pay attention - limited upside

The 3 months correlation between Vecima and Brookfield is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Vecima Networks and Brookfield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield and Vecima Networks 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 Vecima Networks 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 Vecima Networks i.e., Vecima Networks and Brookfield go up and down completely randomly.

Pair Corralation between Vecima Networks and Brookfield

Assuming the 90 days trading horizon Vecima Networks is expected to generate 3.93 times less return on investment than Brookfield. In addition to that, Vecima Networks is 1.48 times more volatile than Brookfield. It trades about 0.03 of its total potential returns per unit of risk. Brookfield is currently generating about 0.15 per unit of volatility. If you would invest  5,129  in Brookfield on September 13, 2024 and sell it today you would earn a total of  3,378  from holding Brookfield or generate 65.86% return on investment over 90 days.

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

Vecima Networks  vs.  Brookfield

Vecima Networks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vecima Networks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Brookfield

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Brookfield displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vecima Networks and Brookfield

The main advantage of trading using opposite Vecima Networks and Brookfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vecima Networks 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 Vecima Networks 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.