Correlation Between Brookfield Asset and Cognex

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

Diversification Opportunities for Brookfield Asset and Cognex

-0.22

Correlation Coefficient

Brookfield Asset  Cognex

Very good diversification

The 3 months correlation between Brookfield and Cognex is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Asset Management and Cognex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognex 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 Cognex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cognex has no effect on the direction of Brookfield Asset i.e., Brookfield Asset and Cognex go up and down completely randomly.

Pair Corralation between Brookfield Asset and Cognex

Assuming the 90 days horizon Brookfield Asset Management is expected to generate 0.41 times more return on investment than Cognex. However, Brookfield Asset Management is 2.41 times less risky than Cognex. It trades about 0.04 of its potential returns per unit of risk. Cognex is currently generating about 0.01 per unit of risk. If you would invest  791.00  in Brookfield Asset Management on July 24, 2024 and sell it today you would earn a total of  124.00  from holding Brookfield Asset Management or generate 15.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Brookfield Asset Management  vs.  Cognex

Brookfield Asset Man

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Asset Management are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Brookfield Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Cognex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cognex 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 basic indicators remain fairly strong which may send shares a bit higher in November 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Brookfield Asset and Cognex

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

The idea behind Brookfield Asset Management and Cognex 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.