Correlation Between Brookfield Business and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both Brookfield Business and Canadian Utilities 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 Canadian Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookfield Business Corp and Canadian Utilities Ltd, you can compare the effects of market volatilities on Brookfield Business and Canadian Utilities 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 Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Business and Canadian Utilities.
Diversification Opportunities for Brookfield Business and Canadian Utilities
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Brookfield and Canadian is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Corp and Canadian Utilities Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities 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 Corp are associated (or correlated) with Canadian Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Utilities has no effect on the direction of Brookfield Business i.e., Brookfield Business and Canadian Utilities go up and down completely randomly.
Pair Corralation between Brookfield Business and Canadian Utilities
Assuming the 90 days trading horizon Brookfield Business Corp is expected to generate 1.94 times more return on investment than Canadian Utilities. However, Brookfield Business is 1.94 times more volatile than Canadian Utilities Ltd. It trades about 0.08 of its potential returns per unit of risk. Canadian Utilities Ltd is currently generating about 0.08 per unit of risk. If you would invest 3,742 in Brookfield Business Corp on September 13, 2024 and sell it today you would earn a total of 97.00 from holding Brookfield Business Corp or generate 2.59% 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 Corp vs. Canadian Utilities Ltd
Performance |
| Timeline |
| Brookfield Business Corp |
| Canadian Utilities |
Brookfield Business and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Business and Canadian Utilities
The main advantage of trading using opposite Brookfield Business and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Business position performs unexpectedly, Canadian Utilities 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 Canadian Utilities will offset losses from the drop in Canadian Utilities' long position.| Brookfield Business vs. Berkshire Hathaway CDR | Brookfield Business vs. E L Financial Corp | Brookfield Business vs. E L Financial 3 | Brookfield Business vs. Molson Coors Canada |
| Canadian Utilities vs. CVW CleanTech | Canadian Utilities vs. Canaf Investments | Canadian Utilities vs. Westshore Terminals Investment | Canadian Utilities vs. Partners Value Investments |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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