Correlation Between Brookfield Business and Helios Fairfax

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Can any of the company-specific risk be diversified away by investing in both Brookfield Business and Helios Fairfax 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 Helios Fairfax 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 Helios Fairfax Partners, you can compare the effects of market volatilities on Brookfield Business and Helios Fairfax 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 Helios Fairfax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Business and Helios Fairfax.

Diversification Opportunities for Brookfield Business and Helios Fairfax

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between Brookfield and Helios is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Corp and Helios Fairfax Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helios Fairfax Partners 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 Helios Fairfax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helios Fairfax Partners has no effect on the direction of Brookfield Business i.e., Brookfield Business and Helios Fairfax go up and down completely randomly.

Pair Corralation between Brookfield Business and Helios Fairfax

Given the investment horizon of 90 days Brookfield Business Corp is expected to generate 0.95 times more return on investment than Helios Fairfax. However, Brookfield Business Corp is 1.06 times less risky than Helios Fairfax. It trades about 0.02 of its potential returns per unit of risk. Helios Fairfax Partners is currently generating about -0.05 per unit of risk. If you would invest  2,686  in Brookfield Business Corp on September 13, 2024 and sell it today you would earn a total of  14.00  from holding Brookfield Business Corp or generate 0.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Brookfield Business Corp  vs.  Helios Fairfax Partners

 Performance 
       Timeline  
Brookfield Business Corp 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Business Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Brookfield Business exhibited solid returns over the last few months and may actually be approaching a breakup point.
Helios Fairfax Partners 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Helios Fairfax Partners are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Helios Fairfax may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Brookfield Business and Helios Fairfax Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Brookfield Business and Helios Fairfax

The main advantage of trading using opposite Brookfield Business and Helios Fairfax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Business position performs unexpectedly, Helios Fairfax 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 Helios Fairfax will offset losses from the drop in Helios Fairfax's long position.
The idea behind Brookfield Business Corp and Helios Fairfax Partners pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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