Correlation Between Brookfield Business and Westport Fuel
Can any of the company-specific risk be diversified away by investing in both Brookfield Business and Westport Fuel 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 Westport Fuel 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 Westport Fuel Systems, you can compare the effects of market volatilities on Brookfield Business and Westport Fuel 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 Westport Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Business and Westport Fuel.
Diversification Opportunities for Brookfield Business and Westport Fuel
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Brookfield and Westport is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Partners and Westport Fuel Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westport Fuel Systems 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 Westport Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westport Fuel Systems has no effect on the direction of Brookfield Business i.e., Brookfield Business and Westport Fuel go up and down completely randomly.
Pair Corralation between Brookfield Business and Westport Fuel
Considering the 90-day investment horizon Brookfield Business Partners is expected to generate 1.06 times more return on investment than Westport Fuel. However, Brookfield Business is 1.06 times more volatile than Westport Fuel Systems. It trades about 0.11 of its potential returns per unit of risk. Westport Fuel Systems is currently generating about -0.01 per unit of risk. If you would invest 2,312 in Brookfield Business Partners on August 26, 2024 and sell it today you would earn a total of 192.00 from holding Brookfield Business Partners or generate 8.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield Business Partners vs. Westport Fuel Systems
Performance |
| Timeline |
| Brookfield Business |
| Westport Fuel Systems |
Brookfield Business and Westport Fuel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Business and Westport Fuel
The main advantage of trading using opposite Brookfield Business and Westport Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Business position performs unexpectedly, Westport Fuel 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 Westport Fuel will offset losses from the drop in Westport Fuel'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 |
| Westport Fuel vs. Foresight Autonomous Holdings | Westport Fuel vs. Hyliion Holdings Corp | Westport Fuel vs. American Axle Manufacturing | Westport Fuel vs. Gentex |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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