Correlation Between Brookfield and RBC Discount
Can any of the company-specific risk be diversified away by investing in both Brookfield and RBC Discount 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 RBC Discount into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookfield and RBC Discount Bond, you can compare the effects of market volatilities on Brookfield and RBC Discount 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 RBC Discount. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield and RBC Discount.
Diversification Opportunities for Brookfield and RBC Discount
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Brookfield and RBC is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield and RBC Discount Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Discount Bond 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 RBC Discount. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Discount Bond has no effect on the direction of Brookfield i.e., Brookfield and RBC Discount go up and down completely randomly.
Pair Corralation between Brookfield and RBC Discount
Assuming the 90 days trading horizon Brookfield is expected to generate 3.35 times more return on investment than RBC Discount. However, Brookfield is 3.35 times more volatile than RBC Discount Bond. It trades about 0.07 of its potential returns per unit of risk. RBC Discount Bond is currently generating about 0.08 per unit of risk. If you would invest 1,802 in Brookfield on August 29, 2024 and sell it today you would earn a total of 554.00 from holding Brookfield or generate 30.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.45% |
| Values | Daily Returns |
Brookfield vs. RBC Discount Bond
Performance |
| Timeline |
| Brookfield |
| RBC Discount Bond |
Brookfield and RBC Discount Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield and RBC Discount
The main advantage of trading using opposite Brookfield and RBC Discount positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield position performs unexpectedly, RBC Discount 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 RBC Discount will offset losses from the drop in RBC Discount's long position.| Brookfield vs. Wilmington Capital Management | Brookfield vs. NeuPath Health | Brookfield vs. Goodfood Market Corp | Brookfield vs. SalesforceCom CDR |
| RBC Discount vs. RBC Target 2029 | RBC Discount vs. RBC Quant Dividend | RBC Discount vs. RBC Quant EAFE | RBC Discount vs. RBC Quant European |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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