Correlation Between Brookfield and Next Hydrogen
Can any of the company-specific risk be diversified away by investing in both Brookfield and Next Hydrogen 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 and Next Hydrogen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookfield and Next Hydrogen Solutions, you can compare the effects of market volatilities on Brookfield and Next Hydrogen 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 with a short position of Next Hydrogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield and Next Hydrogen.
Diversification Opportunities for Brookfield and Next Hydrogen
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Brookfield and Next is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield and Next Hydrogen Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Hydrogen Solutions and Brookfield 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 are associated (or correlated) with Next Hydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Hydrogen Solutions has no effect on the direction of Brookfield i.e., Brookfield and Next Hydrogen go up and down completely randomly.
Pair Corralation between Brookfield and Next Hydrogen
Assuming the 90 days trading horizon Brookfield is expected to generate 13.65 times less return on investment than Next Hydrogen. But when comparing it to its historical volatility, Brookfield is 11.69 times less risky than Next Hydrogen. It trades about 0.08 of its potential returns per unit of risk. Next Hydrogen Solutions is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 41.00 in Next Hydrogen Solutions on August 28, 2024 and sell it today you would earn a total of 7.00 from holding Next Hydrogen Solutions or generate 17.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield vs. Next Hydrogen Solutions
Performance |
| Timeline |
| Brookfield |
| Next Hydrogen Solutions |
Brookfield and Next Hydrogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield and Next Hydrogen
The main advantage of trading using opposite Brookfield and Next Hydrogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield position performs unexpectedly, Next Hydrogen 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 Next Hydrogen will offset losses from the drop in Next Hydrogen's long position.| Brookfield vs. Wilmington Capital Management | Brookfield vs. NeuPath Health | Brookfield vs. Goodfood Market Corp | Brookfield vs. SalesforceCom CDR |
| Next Hydrogen vs. Economic Investment Trust | Next Hydrogen vs. Postmedia Network Canada | Next Hydrogen vs. 2028 Investment Grade | Next Hydrogen vs. Monument Mining Limited |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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