Correlation Between BROOKFIELD REINSURANCE and Nova Leap
Can any of the company-specific risk be diversified away by investing in both BROOKFIELD REINSURANCE and Nova Leap 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 REINSURANCE and Nova Leap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BROOKFIELD REINSURANCE LTD and Nova Leap Health, you can compare the effects of market volatilities on BROOKFIELD REINSURANCE and Nova Leap 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 REINSURANCE with a short position of Nova Leap. Check out your portfolio center. Please also check ongoing floating volatility patterns of BROOKFIELD REINSURANCE and Nova Leap.
Diversification Opportunities for BROOKFIELD REINSURANCE and Nova Leap
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BROOKFIELD and Nova is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding BROOKFIELD REINSURANCE LTD and Nova Leap Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Leap Health and BROOKFIELD REINSURANCE 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 REINSURANCE LTD are associated (or correlated) with Nova Leap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Leap Health has no effect on the direction of BROOKFIELD REINSURANCE i.e., BROOKFIELD REINSURANCE and Nova Leap go up and down completely randomly.
Pair Corralation between BROOKFIELD REINSURANCE and Nova Leap
Assuming the 90 days trading horizon BROOKFIELD REINSURANCE LTD is expected to generate 0.26 times more return on investment than Nova Leap. However, BROOKFIELD REINSURANCE LTD is 3.81 times less risky than Nova Leap. It trades about 0.15 of its potential returns per unit of risk. Nova Leap Health is currently generating about 0.02 per unit of risk. If you would invest 4,842 in BROOKFIELD REINSURANCE LTD on September 3, 2024 and sell it today you would earn a total of 3,131 from holding BROOKFIELD REINSURANCE LTD or generate 64.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 93.52% |
| Values | Daily Returns |
BROOKFIELD REINSURANCE LTD vs. Nova Leap Health
Performance |
| Timeline |
| BROOKFIELD REINSURANCE |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Nova Leap Health |
BROOKFIELD REINSURANCE and Nova Leap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BROOKFIELD REINSURANCE and Nova Leap
The main advantage of trading using opposite BROOKFIELD REINSURANCE and Nova Leap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BROOKFIELD REINSURANCE position performs unexpectedly, Nova Leap 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 Nova Leap will offset losses from the drop in Nova Leap's long position.The idea behind BROOKFIELD REINSURANCE LTD and Nova Leap Health 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.
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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