Correlation Between Brookfield Asset and Visa

Can any of the company-specific risk be diversified away by investing in both Brookfield Asset and Visa 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 Visa 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 Visa Class A, you can compare the effects of market volatilities on Brookfield Asset and Visa 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 Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Asset and Visa.

Diversification Opportunities for Brookfield Asset and Visa

0.67

Correlation Coefficient

Brookfield Asset  Visa

Poor diversification

The 3 months correlation between Brookfield and Visa is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Asset Management and Visa Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Class A 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 Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Class A has no effect on the direction of Brookfield Asset i.e., Brookfield Asset and Visa go up and down completely randomly.

Pair Corralation between Brookfield Asset and Visa

Considering the 90-day investment horizon Brookfield Asset is expected to generate 11.73 times less return on investment than Visa. In addition to that, Brookfield Asset is 2.04 times more volatile than Visa Class A. It trades about 0.0 of its total potential returns per unit of risk. Visa Class A is currently generating about 0.07 per unit of volatility. If you would invest  19,000  in Visa Class A on January 28, 2024 and sell it today you would earn a total of  8,452  from holding Visa Class A or generate 44.48% return on investment over 90 days.

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

Brookfield Asset Management  vs.  Visa Class A

Brookfield Asset Man

Risk-Adjusted Performance

0 of 100

Very Weak

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

Visa Class A

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Visa is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Brookfield Asset and Visa

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

The idea behind Brookfield Asset Management and Visa Class A 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..