Correlation Between Brookfield Business and AER Energy
Can any of the company-specific risk be diversified away by investing in both Brookfield Business and AER Energy 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 Business and AER Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookfield Business Partners and AER Energy Resources, you can compare the effects of market volatilities on Brookfield Business and AER Energy 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 Business with a short position of AER Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Business and AER Energy.
Diversification Opportunities for Brookfield Business and AER Energy
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Brookfield and AER is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Partners and AER Energy Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AER Energy Resources and Brookfield Business 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 Business Partners are associated (or correlated) with AER Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AER Energy Resources has no effect on the direction of Brookfield Business i.e., Brookfield Business and AER Energy go up and down completely randomly.
Pair Corralation between Brookfield Business and AER Energy
Considering the 90-day investment horizon Brookfield Business is expected to generate 85.19 times less return on investment than AER Energy. But when comparing it to its historical volatility, Brookfield Business Partners is 82.81 times less risky than AER Energy. It trades about 0.15 of its potential returns per unit of risk. AER Energy Resources is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 0.00 in AER Energy Resources on August 30, 2024 and sell it today you would earn a total of 0.01 from holding AER Energy Resources or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Brookfield Business Partners vs. AER Energy Resources
Performance |
| Timeline |
| Brookfield Business |
| AER Energy Resources |
Brookfield Business and AER Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Business and AER Energy
The main advantage of trading using opposite Brookfield Business and AER Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Business position performs unexpectedly, AER Energy 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 AER Energy will offset losses from the drop in AER Energy's long position.| Brookfield Business vs. Steel Partners Holdings | Brookfield Business vs. Compass Diversified | Brookfield Business vs. Matthews International | Brookfield Business vs. Tejon Ranch Co |
| AER Energy vs. 1847 Holdings LLC | AER Energy vs. Westport Fuel Systems | AER Energy vs. Falcons Beyond Global, | AER Energy vs. Brookfield Business Partners |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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