Correlation Between Brookfield Business and Hitachi
Can any of the company-specific risk be diversified away by investing in both Brookfield Business and Hitachi 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 Hitachi 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 Hitachi, you can compare the effects of market volatilities on Brookfield Business and Hitachi 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 Hitachi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Business and Hitachi.
Diversification Opportunities for Brookfield Business and Hitachi
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Brookfield and Hitachi is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Partners and Hitachi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi 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 Hitachi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi has no effect on the direction of Brookfield Business i.e., Brookfield Business and Hitachi go up and down completely randomly.
Pair Corralation between Brookfield Business and Hitachi
Considering the 90-day investment horizon Brookfield Business Partners is expected to generate 0.44 times more return on investment than Hitachi. However, Brookfield Business Partners is 2.25 times less risky than Hitachi. It trades about 0.42 of its potential returns per unit of risk. Hitachi is currently generating about 0.12 per unit of risk. If you would invest 2,226 in Brookfield Business Partners on September 1, 2024 and sell it today you would earn a total of 418.00 from holding Brookfield Business Partners or generate 18.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield Business Partners vs. Hitachi
Performance |
| Timeline |
| Brookfield Business |
| Hitachi |
Brookfield Business and Hitachi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Business and Hitachi
The main advantage of trading using opposite Brookfield Business and Hitachi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Business position performs unexpectedly, Hitachi 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 Hitachi will offset losses from the drop in Hitachi's long position.| Brookfield Business vs. Canadian Solar | Brookfield Business vs. Maxeon Solar Technologies | Brookfield Business vs. SolarEdge Technologies | Brookfield Business vs. Sunnova Energy International |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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