Correlation Between Brighthouse Financial and Brookfield Corp
Can any of the company-specific risk be diversified away by investing in both Brighthouse Financial and Brookfield Corp 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 Brighthouse Financial and Brookfield Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brighthouse Financial and Brookfield Corp, you can compare the effects of market volatilities on Brighthouse Financial and Brookfield Corp 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 Brighthouse Financial with a short position of Brookfield Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brighthouse Financial and Brookfield Corp.
Diversification Opportunities for Brighthouse Financial and Brookfield Corp
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Brighthouse and Brookfield is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Brighthouse Financial and Brookfield Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Corp and Brighthouse Financial 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 Brighthouse Financial are associated (or correlated) with Brookfield Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Corp has no effect on the direction of Brighthouse Financial i.e., Brighthouse Financial and Brookfield Corp go up and down completely randomly.
Pair Corralation between Brighthouse Financial and Brookfield Corp
Assuming the 90 days horizon Brighthouse Financial is expected to under-perform the Brookfield Corp. But the preferred stock apears to be less risky and, when comparing its historical volatility, Brighthouse Financial is 2.65 times less risky than Brookfield Corp. The preferred stock trades about -0.24 of its potential returns per unit of risk. The Brookfield Corp is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 5,365 in Brookfield Corp on January 20, 2025 and sell it today you would lose (395.00) from holding Brookfield Corp or give up 7.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brighthouse Financial vs. Brookfield Corp
Performance |
| Timeline |
| Brighthouse Financial |
| Brookfield Corp |
Brighthouse Financial and Brookfield Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brighthouse Financial and Brookfield Corp
The main advantage of trading using opposite Brighthouse Financial and Brookfield Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brighthouse Financial position performs unexpectedly, Brookfield Corp 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 Corp will offset losses from the drop in Brookfield Corp's long position.| Brighthouse Financial vs. Brighthouse Financial | Brighthouse Financial vs. Brighthouse Financial | Brighthouse Financial vs. Brighthouse Financial | Brighthouse Financial vs. First Citizens BancShares |
| Brookfield Corp vs. KKR Co LP | Brookfield Corp vs. Blackstone Group | Brookfield Corp vs. T Rowe Price | Brookfield Corp vs. Apollo Global Management |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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