Correlation Between Brookfield Corp and Focus Impact

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

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

Diversification Opportunities for Brookfield Corp and Focus Impact

-0.56

Correlation Coefficient

Brookfield Corp  Focus Impact

Excellent diversification

The 3 months correlation between Brookfield and Focus is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Corp and Focus Impact Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Impact Acquisition and Brookfield Corp 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 Corp are associated (or correlated) with Focus Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Impact Acquisition has no effect on the direction of Brookfield Corp i.e., Brookfield Corp and Focus Impact go up and down completely randomly.

Pair Corralation between Brookfield Corp and Focus Impact

Allowing for the 90-day total investment horizon Brookfield Corp is expected to generate 0.08 times more return on investment than Focus Impact. However, Brookfield Corp is 12.19 times less risky than Focus Impact. It trades about 0.18 of its potential returns per unit of risk. Focus Impact Acquisition is currently generating about -0.05 per unit of risk. If you would invest  4,697  in Brookfield Corp on August 21, 2024 and sell it today you would earn a total of  914.00  from holding Brookfield Corp or generate 19.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	89.06%
Values	Daily Returns

Brookfield Corp  vs.  Focus Impact Acquisition

Brookfield Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Brookfield Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Focus Impact Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Focus Impact Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Brookfield Corp and Focus Impact

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

The idea behind Brookfield Corp and Focus Impact Acquisition 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.