Correlation Between BCE and Brookfield Property
Can any of the company-specific risk be diversified away by investing in both BCE and Brookfield Property 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 BCE and Brookfield Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BCE Inc and Brookfield Property Partners, you can compare the effects of market volatilities on BCE and Brookfield Property 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 BCE with a short position of Brookfield Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCE and Brookfield Property.
Diversification Opportunities for BCE and Brookfield Property
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BCE and Brookfield is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and Brookfield Property Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Property and BCE 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 BCE Inc are associated (or correlated) with Brookfield Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Property has no effect on the direction of BCE i.e., BCE and Brookfield Property go up and down completely randomly.
Pair Corralation between BCE and Brookfield Property
Considering the 90-day investment horizon BCE Inc is expected to under-perform the Brookfield Property. But the stock apears to be less risky and, when comparing its historical volatility, BCE Inc is 1.49 times less risky than Brookfield Property. The stock trades about -0.09 of its potential returns per unit of risk. The Brookfield Property Partners is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,085 in Brookfield Property Partners on September 1, 2024 and sell it today you would earn a total of 372.00 from holding Brookfield Property Partners or generate 34.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BCE Inc vs. Brookfield Property Partners
Performance |
| Timeline |
| BCE Inc |
| Brookfield Property |
BCE and Brookfield Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BCE and Brookfield Property
The main advantage of trading using opposite BCE and Brookfield Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCE position performs unexpectedly, Brookfield Property 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 Brookfield Property will offset losses from the drop in Brookfield Property's long position.The idea behind BCE Inc and Brookfield Property 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.| Brookfield Property vs. Ardelyx | Brookfield Property vs. Sellas Life Sciences | Brookfield Property vs. Highway Holdings Limited | Brookfield Property vs. Avient 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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