Correlation Between Brookfield Asset and Postmedia Network
Can any of the company-specific risk be diversified away by investing in both Brookfield Asset and Postmedia Network 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 Postmedia Network 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 Postmedia Network Canada, you can compare the effects of market volatilities on Brookfield Asset and Postmedia Network 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 Postmedia Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Asset and Postmedia Network.
Diversification Opportunities for Brookfield Asset and Postmedia Network
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Brookfield and Postmedia is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Asset Management and Postmedia Network Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postmedia Network Canada 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 Postmedia Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postmedia Network Canada has no effect on the direction of Brookfield Asset i.e., Brookfield Asset and Postmedia Network go up and down completely randomly.
Pair Corralation between Brookfield Asset and Postmedia Network
Assuming the 90 days trading horizon Brookfield Asset Management is expected to generate 0.09 times more return on investment than Postmedia Network. However, Brookfield Asset Management is 11.66 times less risky than Postmedia Network. It trades about 0.2 of its potential returns per unit of risk. Postmedia Network Canada is currently generating about -0.02 per unit of risk. If you would invest 1,230 in Brookfield Asset Management on November 4, 2024 and sell it today you would earn a total of 36.00 from holding Brookfield Asset Management or generate 2.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield Asset Management vs. Postmedia Network Canada
Performance |
| Timeline |
| Brookfield Asset Man |
| Postmedia Network Canada |
Brookfield Asset and Postmedia Network Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Asset and Postmedia Network
The main advantage of trading using opposite Brookfield Asset and Postmedia Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Asset position performs unexpectedly, Postmedia Network 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 Postmedia Network will offset losses from the drop in Postmedia Network'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 |
| Postmedia Network vs. Pace Metals | Postmedia Network vs. Ramp Metals | Postmedia Network vs. Arizona Metals Corp | Postmedia Network vs. Algoma Steel Group |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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