Correlation Between Brookfield Asset and Maple Leaf
Can any of the company-specific risk be diversified away by investing in both Brookfield Asset and Maple Leaf 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 Maple Leaf 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 Maple Leaf Foods, you can compare the effects of market volatilities on Brookfield Asset and Maple Leaf 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 Maple Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Asset and Maple Leaf.
Diversification Opportunities for Brookfield Asset and Maple Leaf
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Brookfield and Maple is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Asset Management and Maple Leaf Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maple Leaf Foods 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 Maple Leaf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maple Leaf Foods has no effect on the direction of Brookfield Asset i.e., Brookfield Asset and Maple Leaf go up and down completely randomly.
Pair Corralation between Brookfield Asset and Maple Leaf
Assuming the 90 days trading horizon Brookfield Asset is expected to generate 1.49 times less return on investment than Maple Leaf. But when comparing it to its historical volatility, Brookfield Asset Management is 2.85 times less risky than Maple Leaf. It trades about 0.34 of its potential returns per unit of risk. Maple Leaf Foods is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,125 in Maple Leaf Foods on August 30, 2024 and sell it today you would earn a total of 165.00 from holding Maple Leaf Foods or generate 7.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield Asset Management vs. Maple Leaf Foods
Performance |
| Timeline |
| Brookfield Asset Man |
| Maple Leaf Foods |
Brookfield Asset and Maple Leaf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Asset and Maple Leaf
The main advantage of trading using opposite Brookfield Asset and Maple Leaf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Asset position performs unexpectedly, Maple Leaf 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 Maple Leaf will offset losses from the drop in Maple Leaf's long position.| Brookfield Asset vs. GOLDMAN SACHS CDR | Brookfield Asset vs. Galaxy Digital Holdings | Brookfield Asset vs. Hut 8 Mining | Brookfield Asset vs. Bitfarms |
| Maple Leaf vs. Amazon CDR | Maple Leaf vs. Apple Inc CDR | Maple Leaf vs. Alphabet Inc CDR | Maple Leaf vs. Walmart Inc CDR |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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