Correlation Between Walmart and Brookfield Office

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

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

Diversification Opportunities for Walmart and Brookfield Office

0.91

Correlation Coefficient

Walmart  Brookfield Office

Almost no diversification

The 3 months correlation between Walmart and Brookfield is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Brookfield Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Office and Walmart 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 Walmart Inc CDR are associated (or correlated) with Brookfield Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Office has no effect on the direction of Walmart i.e., Walmart and Brookfield Office go up and down completely randomly.

Pair Corralation between Walmart and Brookfield Office

Assuming the 90 days trading horizon Walmart is expected to generate 1.41 times less return on investment than Brookfield Office. In addition to that, Walmart is 1.17 times more volatile than Brookfield Office Properties. It trades about 0.19 of its total potential returns per unit of risk. Brookfield Office Properties is currently generating about 0.31 per unit of volatility. If you would invest  1,485  in Brookfield Office Properties on October 4, 2024 and sell it today you would earn a total of  664.00  from holding Brookfield Office Properties or generate 44.71% return on investment over 90 days.

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

Walmart Inc CDR  vs.  Brookfield Office Properties

Walmart Inc CDR

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart Inc CDR are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Walmart may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Brookfield Office

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Office Properties are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Brookfield Office may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Walmart and Brookfield Office

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

The idea behind Walmart Inc CDR and Brookfield Office Properties 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.

Check out your portfolio center.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.