Correlation Between Brookfield Asset and Lycos Energy

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Can any of the company-specific risk be diversified away by investing in both Brookfield Asset and Lycos Energy 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 Lycos Energy 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 Lycos Energy, you can compare the effects of market volatilities on Brookfield Asset and Lycos Energy 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 Lycos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Asset and Lycos Energy.

Diversification Opportunities for Brookfield Asset and Lycos Energy

-0.63
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Brookfield and Lycos is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Asset Management and Lycos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lycos Energy 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 Lycos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lycos Energy has no effect on the direction of Brookfield Asset i.e., Brookfield Asset and Lycos Energy go up and down completely randomly.

Pair Corralation between Brookfield Asset and Lycos Energy

Assuming the 90 days trading horizon Brookfield Asset Management is expected to generate 0.16 times more return on investment than Lycos Energy. However, Brookfield Asset Management is 6.27 times less risky than Lycos Energy. It trades about 0.26 of its potential returns per unit of risk. Lycos Energy is currently generating about -0.12 per unit of risk. If you would invest  1,221  in Brookfield Asset Management on October 28, 2024 and sell it today you would earn a total of  34.00  from holding Brookfield Asset Management or generate 2.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Brookfield Asset Management  vs.  Lycos Energy

 Performance 
       Timeline  
Brookfield Asset Man 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Asset Management are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Brookfield Asset may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Lycos Energy 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Lycos Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Brookfield Asset and Lycos Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Brookfield Asset and Lycos Energy

The main advantage of trading using opposite Brookfield Asset and Lycos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Asset position performs unexpectedly, Lycos Energy 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 Lycos Energy will offset losses from the drop in Lycos Energy's long position.
The idea behind Brookfield Asset Management and Lycos Energy 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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