Correlation Between ARISTOCRAT LEISURE and BROOKFIELD CORP
Can any of the company-specific risk be diversified away by investing in both ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE and BROOKFIELD CORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARISTOCRAT LEISURE and BROOKFIELD P CLA, you can compare the effects of market volatilities on ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE with a short position of BROOKFIELD CORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARISTOCRAT LEISURE and BROOKFIELD CORP.
Diversification Opportunities for ARISTOCRAT LEISURE and BROOKFIELD CORP
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ARISTOCRAT and BROOKFIELD is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding ARISTOCRAT LEISURE and BROOKFIELD P CLA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROOKFIELD P CLA and ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE 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 P CLA has no effect on the direction of ARISTOCRAT LEISURE i.e., ARISTOCRAT LEISURE and BROOKFIELD CORP go up and down completely randomly.
Pair Corralation between ARISTOCRAT LEISURE and BROOKFIELD CORP
Assuming the 90 days trading horizon ARISTOCRAT LEISURE is expected to generate 1.71 times less return on investment than BROOKFIELD CORP. But when comparing it to its historical volatility, ARISTOCRAT LEISURE is 2.84 times less risky than BROOKFIELD CORP. It trades about 0.51 of its potential returns per unit of risk. BROOKFIELD P CLA is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 4,930 in BROOKFIELD P CLA on September 4, 2024 and sell it today you would earn a total of 950.00 from holding BROOKFIELD P CLA or generate 19.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARISTOCRAT LEISURE vs. BROOKFIELD P CLA
Performance |
| Timeline |
| ARISTOCRAT LEISURE |
| BROOKFIELD P CLA |
ARISTOCRAT LEISURE and BROOKFIELD CORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARISTOCRAT LEISURE and BROOKFIELD CORP
The main advantage of trading using opposite ARISTOCRAT LEISURE and BROOKFIELD CORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARISTOCRAT LEISURE 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.| ARISTOCRAT LEISURE vs. TOTAL GABON | ARISTOCRAT LEISURE vs. Walgreens Boots Alliance | ARISTOCRAT LEISURE vs. Peak Resources Limited |
| BROOKFIELD CORP vs. MCEWEN MINING INC | BROOKFIELD CORP vs. GALENA MINING LTD | BROOKFIELD CORP vs. Lion One Metals | BROOKFIELD CORP vs. Perseus Mining Limited |
Check out your portfolio center.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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