Correlation Between Brookfield Business and Transat AT
Can any of the company-specific risk be diversified away by investing in both Brookfield Business and Transat AT 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 Transat AT 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 Transat AT, you can compare the effects of market volatilities on Brookfield Business and Transat AT 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 Transat AT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Business and Transat AT.
Diversification Opportunities for Brookfield Business and Transat AT
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Brookfield and Transat is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Corp and Transat AT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transat AT 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 Transat AT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transat AT has no effect on the direction of Brookfield Business i.e., Brookfield Business and Transat AT go up and down completely randomly.
Pair Corralation between Brookfield Business and Transat AT
Assuming the 90 days trading horizon Brookfield Business Corp is expected to generate 1.03 times more return on investment than Transat AT. However, Brookfield Business is 1.03 times more volatile than Transat AT. It trades about 0.12 of its potential returns per unit of risk. Transat AT is currently generating about -0.17 per unit of risk. If you would invest 2,796 in Brookfield Business Corp on August 29, 2024 and sell it today you would earn a total of 1,138 from holding Brookfield Business Corp or generate 40.7% 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. Transat AT
Performance |
| Timeline |
| Brookfield Business Corp |
| Transat AT |
Brookfield Business and Transat AT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Business and Transat AT
The main advantage of trading using opposite Brookfield Business and Transat AT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Business position performs unexpectedly, Transat AT 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 Transat AT will offset losses from the drop in Transat AT's long position.| Brookfield Business vs. Canso Select Opportunities | Brookfield Business vs. Renoworks Software | Brookfield Business vs. North American Financial | Brookfield Business vs. Toronto Dominion Bank |
| Transat AT vs. Chorus Aviation | Transat AT vs. Cineplex | Transat AT vs. Lion Electric Corp | Transat AT vs. Air Canada |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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