Correlation Between Brookfield Business and Compass Diversified
Can any of the company-specific risk be diversified away by investing in both Brookfield Business and Compass Diversified 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 Compass Diversified 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 Compass Diversified, you can compare the effects of market volatilities on Brookfield Business and Compass Diversified 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 Compass Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Business and Compass Diversified.
Diversification Opportunities for Brookfield Business and Compass Diversified
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Brookfield and Compass is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Partners and Compass Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Diversified 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 Compass Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Diversified has no effect on the direction of Brookfield Business i.e., Brookfield Business and Compass Diversified go up and down completely randomly.
Pair Corralation between Brookfield Business and Compass Diversified
Considering the 90-day investment horizon Brookfield Business Partners is expected to generate 3.16 times more return on investment than Compass Diversified. However, Brookfield Business is 3.16 times more volatile than Compass Diversified. It trades about 0.12 of its potential returns per unit of risk. Compass Diversified is currently generating about -0.31 per unit of risk. If you would invest 2,255 in Brookfield Business Partners on August 24, 2024 and sell it today you would earn a total of 101.00 from holding Brookfield Business Partners or generate 4.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Brookfield Business Partners vs. Compass Diversified
Performance |
| Timeline |
| Brookfield Business |
| Compass Diversified |
Brookfield Business and Compass Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Business and Compass Diversified
The main advantage of trading using opposite Brookfield Business and Compass Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Business position performs unexpectedly, Compass Diversified 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 Compass Diversified will offset losses from the drop in Compass Diversified'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 |
| Compass Diversified vs. Steel Partners Holdings | Compass Diversified vs. Compass Diversified | Compass Diversified vs. Steel Partners Holdings | Compass Diversified vs. Tejon Ranch Co |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |