Correlation Between Brookfield Corp and Federal Home
Can any of the company-specific risk be diversified away by investing in both Brookfield Corp and Federal Home 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 Corp and Federal Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookfield Corp and Federal Home Loan, you can compare the effects of market volatilities on Brookfield Corp and Federal Home 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 Corp with a short position of Federal Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Corp and Federal Home.
Diversification Opportunities for Brookfield Corp and Federal Home
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brookfield and Federal is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Corp and Federal Home Loan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Home Loan and Brookfield Corp 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 Corp are associated (or correlated) with Federal Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Home Loan has no effect on the direction of Brookfield Corp i.e., Brookfield Corp and Federal Home go up and down completely randomly.
Pair Corralation between Brookfield Corp and Federal Home
Allowing for the 90-day total investment horizon Brookfield Corp is expected to generate 2.54 times less return on investment than Federal Home. But when comparing it to its historical volatility, Brookfield Corp is 3.23 times less risky than Federal Home. It trades about 0.16 of its potential returns per unit of risk. Federal Home Loan is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 317.00 in Federal Home Loan on August 25, 2024 and sell it today you would earn a total of 1,183 from holding Federal Home Loan or generate 373.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Brookfield Corp vs. Federal Home Loan
Performance |
| Timeline |
| Brookfield Corp |
| Federal Home Loan |
Brookfield Corp and Federal Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Corp and Federal Home
The main advantage of trading using opposite Brookfield Corp and Federal Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Corp position performs unexpectedly, Federal Home 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 Federal Home will offset losses from the drop in Federal Home's long position.| Brookfield Corp vs. KKR Co LP | Brookfield Corp vs. Blackstone Group | Brookfield Corp vs. T Rowe Price | Brookfield Corp vs. Apollo Global Management |
| Federal Home vs. Federal Home Loan | Federal Home vs. Federal Home Loan | Federal Home vs. Federal Home Loan | Federal Home vs. Federal Home Loan |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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