Correlation Between Brookfield Business and Enbridge Pref
Can any of the company-specific risk be diversified away by investing in both Brookfield Business and Enbridge Pref 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 Enbridge Pref 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 Enbridge Pref 7, you can compare the effects of market volatilities on Brookfield Business and Enbridge Pref 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 Enbridge Pref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Business and Enbridge Pref.
Diversification Opportunities for Brookfield Business and Enbridge Pref
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Brookfield and Enbridge is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Corp and Enbridge Pref 7 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge Pref 7 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 Enbridge Pref. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge Pref 7 has no effect on the direction of Brookfield Business i.e., Brookfield Business and Enbridge Pref go up and down completely randomly.
Pair Corralation between Brookfield Business and Enbridge Pref
Assuming the 90 days trading horizon Brookfield Business Corp is expected to under-perform the Enbridge Pref. In addition to that, Brookfield Business is 4.95 times more volatile than Enbridge Pref 7. It trades about -0.01 of its total potential returns per unit of risk. Enbridge Pref 7 is currently generating about 0.52 per unit of volatility. If you would invest 2,023 in Enbridge Pref 7 on October 23, 2024 and sell it today you would earn a total of 93.00 from holding Enbridge Pref 7 or generate 4.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Brookfield Business Corp vs. Enbridge Pref 7
Performance |
| Timeline |
| Brookfield Business Corp |
| Enbridge Pref 7 |
Brookfield Business and Enbridge Pref Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Business and Enbridge Pref
The main advantage of trading using opposite Brookfield Business and Enbridge Pref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Business position performs unexpectedly, Enbridge Pref 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 Enbridge Pref will offset losses from the drop in Enbridge Pref's long position.| Brookfield Business vs. Capstone Mining Corp | Brookfield Business vs. Mako Mining Corp | Brookfield Business vs. Maple Leaf Foods | Brookfield Business vs. Arizona Gold Silver |
| Enbridge Pref vs. Element Fleet Management | Enbridge Pref vs. IGM Financial | Enbridge Pref vs. Champion Iron | Enbridge Pref vs. Highwood Asset Management |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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