Correlation Between Brookfield Asset and Excellon Resources
Can any of the company-specific risk be diversified away by investing in both Brookfield Asset and Excellon Resources 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 Asset and Excellon Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookfield Asset Management and Excellon Resources, you can compare the effects of market volatilities on Brookfield Asset and Excellon Resources 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 Asset with a short position of Excellon Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Asset and Excellon Resources.
Diversification Opportunities for Brookfield Asset and Excellon Resources
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Brookfield and Excellon is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Asset Management and Excellon Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Excellon Resources and Brookfield Asset 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 Asset Management are associated (or correlated) with Excellon Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Excellon Resources has no effect on the direction of Brookfield Asset i.e., Brookfield Asset and Excellon Resources go up and down completely randomly.
Pair Corralation between Brookfield Asset and Excellon Resources
Assuming the 90 days trading horizon Brookfield Asset is expected to generate 1.67 times less return on investment than Excellon Resources. But when comparing it to its historical volatility, Brookfield Asset Management is 7.76 times less risky than Excellon Resources. It trades about 0.03 of its potential returns per unit of risk. Excellon Resources is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 38.00 in Excellon Resources on December 12, 2024 and sell it today you would lose (26.00) from holding Excellon Resources or give up 68.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield Asset Management vs. Excellon Resources
Performance |
| Timeline |
| Brookfield Asset Man |
| Excellon Resources |
Brookfield Asset and Excellon Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Asset and Excellon Resources
The main advantage of trading using opposite Brookfield Asset and Excellon Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Asset position performs unexpectedly, Excellon Resources 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 Excellon Resources will offset losses from the drop in Excellon Resources' long position.| Brookfield Asset vs. Fairfax Financial Holdings | ||
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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