Correlation Between Brookfield Business and NN
Can any of the company-specific risk be diversified away by investing in both Brookfield Business and NN 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 NN 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 NN Inc, you can compare the effects of market volatilities on Brookfield Business and NN 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 NN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Business and NN.
Diversification Opportunities for Brookfield Business and NN
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brookfield and NN is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Partners and NN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Inc 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 NN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Inc has no effect on the direction of Brookfield Business i.e., Brookfield Business and NN go up and down completely randomly.
Pair Corralation between Brookfield Business and NN
Considering the 90-day investment horizon Brookfield Business Partners is expected to generate 0.49 times more return on investment than NN. However, Brookfield Business Partners is 2.04 times less risky than NN. It trades about 0.05 of its potential returns per unit of risk. NN Inc is currently generating about -0.01 per unit of risk. If you would invest 1,998 in Brookfield Business Partners on November 2, 2024 and sell it today you would earn a total of 157.00 from holding Brookfield Business Partners or generate 7.86% 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. NN Inc
Performance |
| Timeline |
| Brookfield Business |
| NN Inc |
Brookfield Business and NN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Business and NN
The main advantage of trading using opposite Brookfield Business and NN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Business position performs unexpectedly, NN 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 NN will offset losses from the drop in NN'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 |
| NN vs. Steel Partners Holdings | NN vs. Compass Diversified | NN vs. Brookfield Business Partners | NN vs. Matthews 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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