Correlation Between Brighthouse Financial and Brookfield Property
Can any of the company-specific risk be diversified away by investing in both Brighthouse Financial 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 Brighthouse Financial and Brookfield Property 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 Property Partners, you can compare the effects of market volatilities on Brighthouse Financial 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 Brighthouse Financial with a short position of Brookfield Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brighthouse Financial and Brookfield Property.
Diversification Opportunities for Brighthouse Financial and Brookfield Property
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brighthouse and Brookfield is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Brighthouse Financial and Brookfield Property Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Property 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 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 Brighthouse Financial i.e., Brighthouse Financial and Brookfield Property go up and down completely randomly.
Pair Corralation between Brighthouse Financial and Brookfield Property
Assuming the 90 days horizon Brighthouse Financial is expected to under-perform the Brookfield Property. But the preferred stock apears to be less risky and, when comparing its historical volatility, Brighthouse Financial is 1.49 times less risky than Brookfield Property. The preferred stock trades about -0.23 of its potential returns per unit of risk. The Brookfield Property Partners is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 1,651 in Brookfield Property Partners on August 29, 2024 and sell it today you would lose (36.00) from holding Brookfield Property Partners or give up 2.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brighthouse Financial vs. Brookfield Property Partners
Performance |
| Timeline |
| Brighthouse Financial |
| Brookfield Property |
Brighthouse Financial and Brookfield Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brighthouse Financial and Brookfield Property
The main advantage of trading using opposite Brighthouse Financial and Brookfield Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brighthouse Financial 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 Brighthouse Financial 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.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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |