Correlation Between Amazon CDR and Brookfield
Can any of the company-specific risk be diversified away by investing in both Amazon CDR and Brookfield 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 Amazon CDR and Brookfield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and Brookfield, you can compare the effects of market volatilities on Amazon CDR and Brookfield 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 Amazon CDR with a short position of Brookfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Brookfield.
Diversification Opportunities for Amazon CDR and Brookfield
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amazon and Brookfield is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Brookfield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield and Amazon CDR 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 Amazon CDR are associated (or correlated) with Brookfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield has no effect on the direction of Amazon CDR i.e., Amazon CDR and Brookfield go up and down completely randomly.
Pair Corralation between Amazon CDR and Brookfield
Assuming the 90 days trading horizon Amazon CDR is expected to generate 1.69 times less return on investment than Brookfield. In addition to that, Amazon CDR is 1.19 times more volatile than Brookfield. It trades about 0.08 of its total potential returns per unit of risk. Brookfield is currently generating about 0.15 per unit of volatility. If you would invest 5,315 in Brookfield on August 28, 2024 and sell it today you would earn a total of 3,031 from holding Brookfield or generate 57.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon CDR vs. Brookfield
Performance |
| Timeline |
| Amazon CDR |
| Brookfield |
Amazon CDR and Brookfield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon CDR and Brookfield
The main advantage of trading using opposite Amazon CDR and Brookfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, Brookfield 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 will offset losses from the drop in Brookfield's long position.| Amazon CDR vs. NVIDIA CDR | Amazon CDR vs. Apple Inc CDR | Amazon CDR vs. Microsoft Corp CDR | Amazon CDR vs. Alphabet Inc CDR |
| Brookfield vs. Brookfield Asset Management | Brookfield vs. Brookfield Infrastructure Partners | Brookfield vs. Brookfield Infrastructure Corp | Brookfield vs. Brookfield Renewable Corp |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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