Correlation Between Brookfield Business and Federated Premier
Can any of the company-specific risk be diversified away by investing in both Brookfield Business and Federated Premier 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 Federated Premier 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 Federated Premier Municipal, you can compare the effects of market volatilities on Brookfield Business and Federated Premier 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 Federated Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Business and Federated Premier.
Diversification Opportunities for Brookfield Business and Federated Premier
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Brookfield and Federated is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Corp and Federated Premier Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Premier 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 Federated Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Premier has no effect on the direction of Brookfield Business i.e., Brookfield Business and Federated Premier go up and down completely randomly.
Pair Corralation between Brookfield Business and Federated Premier
Given the investment horizon of 90 days Brookfield Business Corp is expected to generate 3.71 times more return on investment than Federated Premier. However, Brookfield Business is 3.71 times more volatile than Federated Premier Municipal. It trades about 0.05 of its potential returns per unit of risk. Federated Premier Municipal is currently generating about 0.03 per unit of risk. If you would invest 2,277 in Brookfield Business Corp on August 28, 2024 and sell it today you would earn a total of 449.00 from holding Brookfield Business Corp or generate 19.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield Business Corp vs. Federated Premier Municipal
Performance |
| Timeline |
| Brookfield Business Corp |
| Federated Premier |
Brookfield Business and Federated Premier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Business and Federated Premier
The main advantage of trading using opposite Brookfield Business and Federated Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Business position performs unexpectedly, Federated Premier 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 Federated Premier will offset losses from the drop in Federated Premier's long position.| Brookfield Business vs. Elysee Development Corp | Brookfield Business vs. DWS Municipal Income | Brookfield Business vs. Blackrock Munivest | Brookfield Business vs. Blackrock Muniholdings Closed |
| Federated Premier vs. DTF Tax Free | Federated Premier vs. MFS High Yield | Federated Premier vs. MFS High Income | Federated Premier vs. John Hancock Income |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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