Correlation Between Brookfield Business and Miller Industries
Can any of the company-specific risk be diversified away by investing in both Brookfield Business and Miller Industries 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 Miller Industries 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 Miller Industries, you can compare the effects of market volatilities on Brookfield Business and Miller Industries 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 Miller Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Business and Miller Industries.
Diversification Opportunities for Brookfield Business and Miller Industries
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brookfield and Miller is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Partners and Miller Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miller Industries 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 Miller Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miller Industries has no effect on the direction of Brookfield Business i.e., Brookfield Business and Miller Industries go up and down completely randomly.
Pair Corralation between Brookfield Business and Miller Industries
Considering the 90-day investment horizon Brookfield Business is expected to generate 2.27 times less return on investment than Miller Industries. In addition to that, Brookfield Business is 1.2 times more volatile than Miller Industries. It trades about 0.04 of its total potential returns per unit of risk. Miller Industries is currently generating about 0.1 per unit of volatility. If you would invest 2,709 in Miller Industries on August 23, 2024 and sell it today you would earn a total of 4,016 from holding Miller Industries or generate 148.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield Business Partners vs. Miller Industries
Performance |
| Timeline |
| Brookfield Business |
| Miller Industries |
Brookfield Business and Miller Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Business and Miller Industries
The main advantage of trading using opposite Brookfield Business and Miller Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Business position performs unexpectedly, Miller Industries 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 Miller Industries will offset losses from the drop in Miller Industries' long position.| Brookfield Business vs. Steel Partners Holdings | Brookfield Business vs. Compass Diversified | Brookfield Business vs. Matthews International | Brookfield Business vs. Tejon Ranch Co |
| Miller Industries vs. Dorman Products | Miller Industries vs. Standard Motor Products | Miller Industries vs. Motorcar Parts of | Miller Industries vs. Douglas Dynamics |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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