Correlation Between Associated Capital and Brookfield Corp

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

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

Diversification Opportunities for Associated Capital and Brookfield Corp

0.3

Correlation Coefficient

Associated Capital  Brookfield Corp

Weak diversification

The 3 months correlation between Associated and Brookfield is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and Brookfield Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Corp and Associated Capital 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 Associated Capital Group are associated (or correlated) with Brookfield Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Corp has no effect on the direction of Associated Capital i.e., Associated Capital and Brookfield Corp go up and down completely randomly.

Pair Corralation between Associated Capital and Brookfield Corp

Allowing for the 90-day total investment horizon Associated Capital Group is expected to under-perform the Brookfield Corp. In addition to that, Associated Capital is 1.07 times more volatile than Brookfield Corp. It trades about -0.08 of its total potential returns per unit of risk. Brookfield Corp is currently generating about -0.08 per unit of volatility. If you would invest  5,733  in Brookfield Corp on January 4, 2025 and sell it today you would lose (698.00) from holding Brookfield Corp or give up 12.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Associated Capital Group  vs.  Brookfield Corp

Associated Capital

Risk-Adjusted Performance

Weak

Over the last 90 days Associated Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Brookfield Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brookfield Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Associated Capital and Brookfield Corp

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

The idea behind Associated Capital Group and Brookfield Corp 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.