Correlation Between Brookfield Business and Douglas Dynamics

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

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

Diversification Opportunities for Brookfield Business and Douglas Dynamics

0.87

Correlation Coefficient

Brookfield Business  Douglas Dynamics

Very poor diversification

The 3 months correlation between Brookfield and Douglas is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Partners and Douglas Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Douglas Dynamics and Brookfield Business 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 Business Partners are associated (or correlated) with Douglas Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Douglas Dynamics has no effect on the direction of Brookfield Business i.e., Brookfield Business and Douglas Dynamics go up and down completely randomly.

Pair Corralation between Brookfield Business and Douglas Dynamics

Considering the 90-day investment horizon Brookfield Business Partners is expected to generate 1.16 times more return on investment than Douglas Dynamics. However, Brookfield Business is 1.16 times more volatile than Douglas Dynamics. It trades about 0.11 of its potential returns per unit of risk. Douglas Dynamics is currently generating about 0.12 per unit of risk. If you would invest  2,120  in Brookfield Business Partners on May 6, 2025 and sell it today you would earn a total of  274.00  from holding Brookfield Business Partners or generate 12.92% return on investment over 90 days.

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

Brookfield Business Partners  vs.  Douglas Dynamics

Brookfield Business

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Business Partners are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, Brookfield Business unveiled solid returns over the last few months and may actually be approaching a breakup point.

Douglas Dynamics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Douglas Dynamics are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Douglas Dynamics may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Brookfield Business and Douglas Dynamics

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

The idea behind Brookfield Business Partners and Douglas Dynamics 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.