Correlation Between Brookfield Finance and Air Products
Can any of the company-specific risk be diversified away by investing in both Brookfield Finance and Air Products 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 Finance and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookfield Finance I and Air Products and, you can compare the effects of market volatilities on Brookfield Finance and Air Products 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 Finance with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Finance and Air Products.
Diversification Opportunities for Brookfield Finance and Air Products
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Brookfield and Air is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Finance I and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products and Brookfield Finance 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 Finance I are associated (or correlated) with Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products has no effect on the direction of Brookfield Finance i.e., Brookfield Finance and Air Products go up and down completely randomly.
Pair Corralation between Brookfield Finance and Air Products
Given the investment horizon of 90 days Brookfield Finance I is expected to under-perform the Air Products. But the stock apears to be less risky and, when comparing its historical volatility, Brookfield Finance I is 1.99 times less risky than Air Products. The stock trades about -0.32 of its potential returns per unit of risk. The Air Products and is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 30,078 in Air Products and on September 5, 2024 and sell it today you would earn a total of 2,986 from holding Air Products and or generate 9.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 2.63% |
| Values | Daily Returns |
Brookfield Finance I vs. Air Products and
Performance |
| Timeline |
| Brookfield Finance |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Air Products |
Brookfield Finance and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Finance and Air Products
The main advantage of trading using opposite Brookfield Finance and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Finance position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.| Brookfield Finance vs. Air Products and | Brookfield Finance vs. Luxfer Holdings PLC | Brookfield Finance vs. NL Industries | Brookfield Finance vs. Braskem SA Class |
| Air Products vs. PPG Industries | Air Products vs. Sherwin Williams Co | Air Products vs. Ecolab Inc | Air Products vs. Albemarle 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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