Correlation Between Altus Group and Brookfield Office
Can any of the company-specific risk be diversified away by investing in both Altus Group and Brookfield Office 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 Altus Group and Brookfield Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altus Group Limited and Brookfield Office Properties, you can compare the effects of market volatilities on Altus Group and Brookfield Office 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 Altus Group with a short position of Brookfield Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altus Group and Brookfield Office.
Diversification Opportunities for Altus Group and Brookfield Office
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Altus and Brookfield is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Altus Group Limited and Brookfield Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Office and Altus Group 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 Altus Group Limited are associated (or correlated) with Brookfield Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Office has no effect on the direction of Altus Group i.e., Altus Group and Brookfield Office go up and down completely randomly.
Pair Corralation between Altus Group and Brookfield Office
Assuming the 90 days trading horizon Altus Group is expected to generate 1.95 times less return on investment than Brookfield Office. But when comparing it to its historical volatility, Altus Group Limited is 1.39 times less risky than Brookfield Office. It trades about 0.03 of its potential returns per unit of risk. Brookfield Office Properties is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 887.00 in Brookfield Office Properties on October 12, 2024 and sell it today you would earn a total of 113.00 from holding Brookfield Office Properties or generate 12.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.77% |
| Values | Daily Returns |
Altus Group Limited vs. Brookfield Office Properties
Performance |
| Timeline |
| Altus Group Limited |
| Brookfield Office |
Altus Group and Brookfield Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altus Group and Brookfield Office
The main advantage of trading using opposite Altus Group and Brookfield Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altus Group position performs unexpectedly, Brookfield Office 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 Office will offset losses from the drop in Brookfield Office's long position.| Altus Group vs. Colliers International Group | Altus Group vs. FirstService Corp | Altus Group vs. Winpak | Altus Group vs. Ritchie Bros Auctioneers |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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