Correlation Between Brookfield Business and Theratechnologies
Can any of the company-specific risk be diversified away by investing in both Brookfield Business and Theratechnologies 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 Theratechnologies 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 Theratechnologies, you can compare the effects of market volatilities on Brookfield Business and Theratechnologies 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 Theratechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Business and Theratechnologies.
Diversification Opportunities for Brookfield Business and Theratechnologies
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Brookfield and Theratechnologies is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Corp and Theratechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Theratechnologies 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 Theratechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Theratechnologies has no effect on the direction of Brookfield Business i.e., Brookfield Business and Theratechnologies go up and down completely randomly.
Pair Corralation between Brookfield Business and Theratechnologies
Assuming the 90 days trading horizon Brookfield Business Corp is expected to generate 0.28 times more return on investment than Theratechnologies. However, Brookfield Business Corp is 3.55 times less risky than Theratechnologies. It trades about 0.05 of its potential returns per unit of risk. Theratechnologies is currently generating about -0.33 per unit of risk. If you would invest 3,424 in Brookfield Business Corp on November 5, 2024 and sell it today you would earn a total of 36.00 from holding Brookfield Business Corp or generate 1.05% 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. Theratechnologies
Performance |
| Timeline |
| Brookfield Business Corp |
| Theratechnologies |
Brookfield Business and Theratechnologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Business and Theratechnologies
The main advantage of trading using opposite Brookfield Business and Theratechnologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Business position performs unexpectedly, Theratechnologies 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 Theratechnologies will offset losses from the drop in Theratechnologies' long position.| Brookfield Business vs. Gfl Environmental Holdings | Brookfield Business vs. Diamond Estates Wines | Brookfield Business vs. Rogers Communications | Brookfield Business vs. Algonquin Power Utilities |
| Theratechnologies vs. Data Communications Management | Theratechnologies vs. Precision Drilling | Theratechnologies vs. Pace Metals | Theratechnologies vs. Mako Mining Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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