Correlation Between Brookfield Asset and Investor

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Can any of the company-specific risk be diversified away by investing in both Brookfield Asset and Investor 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 Brookfield Asset and Investor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookfield Asset Management and Investor AB, you can compare the effects of market volatilities on Brookfield Asset and Investor 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 Brookfield Asset with a short position of Investor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Asset and Investor.

Diversification Opportunities for Brookfield Asset and Investor

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Brookfield and Investor is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Asset Management and Investor AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investor AB and Brookfield Asset 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 Brookfield Asset Management are associated (or correlated) with Investor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investor AB has no effect on the direction of Brookfield Asset i.e., Brookfield Asset and Investor go up and down completely randomly.

Pair Corralation between Brookfield Asset and Investor

Considering the 90-day investment horizon Brookfield Asset Management is expected to generate 1.71 times more return on investment than Investor. However, Brookfield Asset is 1.71 times more volatile than Investor AB. It trades about 0.15 of its potential returns per unit of risk. Investor AB is currently generating about 0.11 per unit of risk. If you would invest  4,040  in Brookfield Asset Management on December 30, 2023 and sell it today you would earn a total of  162.00  from holding Brookfield Asset Management or generate 4.01% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Brookfield Asset Management  vs.  Investor AB

 Performance 
       Timeline  
Brookfield Asset Man 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Asset Management are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Brookfield Asset may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Investor AB 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Investor AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Investor may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Brookfield Asset and Investor Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Brookfield Asset and Investor

The main advantage of trading using opposite Brookfield Asset and Investor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Asset position performs unexpectedly, Investor 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 Investor will offset losses from the drop in Investor's long position.
The idea behind Brookfield Asset Management and Investor AB 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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