Correlation Between IShares Canadian and Brookfield Office

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

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

Diversification Opportunities for IShares Canadian and Brookfield Office

0.71

Correlation Coefficient

IShares Canadian  Brookfield Office

Poor diversification

The 3 months correlation between IShares and Brookfield is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and Brookfield Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Office and IShares Canadian 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 iShares Canadian HYBrid 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 IShares Canadian i.e., IShares Canadian and Brookfield Office go up and down completely randomly.

Pair Corralation between IShares Canadian and Brookfield Office

Assuming the 90 days trading horizon IShares Canadian is expected to generate 9.31 times less return on investment than Brookfield Office. But when comparing it to its historical volatility, iShares Canadian HYBrid is 3.99 times less risky than Brookfield Office. It trades about 0.08 of its potential returns per unit of risk. Brookfield Office Properties is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,450  in Brookfield Office Properties on September 22, 2024 and sell it today you would earn a total of  218.00  from holding Brookfield Office Properties or generate 15.03% return on investment over 90 days.

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

iShares Canadian HYBrid  vs.  Brookfield Office Properties

iShares Canadian HYBrid

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Canadian HYBrid are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, IShares Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Brookfield Office

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Office Properties are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Brookfield Office sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Canadian and Brookfield Office

The main advantage of trading using opposite IShares Canadian and Brookfield Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian 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 iShares Canadian HYBrid 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.