Correlation Between Brookfield Business and DWS Municipal
Can any of the company-specific risk be diversified away by investing in both Brookfield Business and DWS Municipal 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 DWS Municipal 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 DWS Municipal Income, you can compare the effects of market volatilities on Brookfield Business and DWS Municipal 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 DWS Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Business and DWS Municipal.
Diversification Opportunities for Brookfield Business and DWS Municipal
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brookfield and DWS is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Corp and DWS Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DWS Municipal Income 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 DWS Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DWS Municipal Income has no effect on the direction of Brookfield Business i.e., Brookfield Business and DWS Municipal go up and down completely randomly.
Pair Corralation between Brookfield Business and DWS Municipal
Given the investment horizon of 90 days Brookfield Business Corp is expected to generate 3.48 times more return on investment than DWS Municipal. However, Brookfield Business is 3.48 times more volatile than DWS Municipal Income. It trades about 0.08 of its potential returns per unit of risk. DWS Municipal Income is currently generating about 0.14 per unit of risk. If you would invest 1,804 in Brookfield Business Corp on August 26, 2024 and sell it today you would earn a total of 852.00 from holding Brookfield Business Corp or generate 47.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield Business Corp vs. DWS Municipal Income
Performance |
| Timeline |
| Brookfield Business Corp |
| DWS Municipal Income |
Brookfield Business and DWS Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Business and DWS Municipal
The main advantage of trading using opposite Brookfield Business and DWS Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Business position performs unexpectedly, DWS Municipal 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 DWS Municipal will offset losses from the drop in DWS Municipal's long position.| Brookfield Business vs. PowerUp Acquisition Corp | Brookfield Business vs. Aurora Innovation | Brookfield Business vs. HUMANA INC | Brookfield Business vs. Aquagold International |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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