Correlation Between Steel Partners and Brookfield Business

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

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

Diversification Opportunities for Steel Partners and Brookfield Business

0.53

Correlation Coefficient

Steel Partners  Brookfield Business

Very weak diversification

The 3 months correlation between Steel and Brookfield is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Steel Partners Holdings and Brookfield Business Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Business and Steel Partners 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 Steel Partners Holdings are associated (or correlated) with Brookfield Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Business has no effect on the direction of Steel Partners i.e., Steel Partners and Brookfield Business go up and down completely randomly.

Pair Corralation between Steel Partners and Brookfield Business

Given the investment horizon of 90 days Steel Partners Holdings is expected to under-perform the Brookfield Business. In addition to that, Steel Partners is 1.34 times more volatile than Brookfield Business Partners. It trades about -0.12 of its total potential returns per unit of risk. Brookfield Business Partners is currently generating about -0.03 per unit of volatility. If you would invest  2,197  in Brookfield Business Partners on January 13, 2025 and sell it today you would lose (177.00) from holding Brookfield Business Partners or give up 8.06% of portfolio value over 90 days.

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

Steel Partners Holdings  vs.  Brookfield Business Partners

Steel Partners Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Steel Partners Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's essential indicators remain relatively invariable which may send shares a bit higher in May 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Brookfield Business

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brookfield Business Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Brookfield Business is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Steel Partners and Brookfield Business

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

The idea behind Steel Partners Holdings and Brookfield Business Partners 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.