Correlation Between Brookfield Business and Solid Power
Can any of the company-specific risk be diversified away by investing in both Brookfield Business and Solid Power 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 Solid Power 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 Solid Power, you can compare the effects of market volatilities on Brookfield Business and Solid Power 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 Solid Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Business and Solid Power.
Diversification Opportunities for Brookfield Business and Solid Power
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Brookfield and Solid is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Partners and Solid Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solid Power 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 Solid Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solid Power has no effect on the direction of Brookfield Business i.e., Brookfield Business and Solid Power go up and down completely randomly.
Pair Corralation between Brookfield Business and Solid Power
Considering the 90-day investment horizon Brookfield Business Partners is expected to generate 0.13 times more return on investment than Solid Power. However, Brookfield Business Partners is 7.43 times less risky than Solid Power. It trades about 0.45 of its potential returns per unit of risk. Solid Power is currently generating about 0.06 per unit of risk. If you would invest 2,155 in Brookfield Business Partners on November 18, 2024 and sell it today you would earn a total of 340.00 from holding Brookfield Business Partners or generate 15.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield Business Partners vs. Solid Power
Performance |
| Timeline |
| Brookfield Business |
| Solid Power |
Brookfield Business and Solid Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Business and Solid Power
The main advantage of trading using opposite Brookfield Business and Solid Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Business position performs unexpectedly, Solid Power 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 Solid Power will offset losses from the drop in Solid Power'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 |
| Solid Power vs. Solid Power | Solid Power vs. EVgo Equity Warrants | Solid Power vs. Microvast Holdings | Solid Power vs. IONQ WT |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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