Correlation Between Brookfield Wealth and American Financial
Can any of the company-specific risk be diversified away by investing in both Brookfield Wealth and American Financial 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 Wealth and American Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookfield Wealth Solutions and American Financial Group, you can compare the effects of market volatilities on Brookfield Wealth and American Financial 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 Wealth with a short position of American Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Wealth and American Financial.
Diversification Opportunities for Brookfield Wealth and American Financial
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Brookfield and American is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Wealth Solutions and American Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Financial and Brookfield Wealth 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 Wealth Solutions are associated (or correlated) with American Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Financial has no effect on the direction of Brookfield Wealth i.e., Brookfield Wealth and American Financial go up and down completely randomly.
Pair Corralation between Brookfield Wealth and American Financial
Considering the 90-day investment horizon Brookfield Wealth Solutions is expected to generate 1.38 times more return on investment than American Financial. However, Brookfield Wealth is 1.38 times more volatile than American Financial Group. It trades about 0.48 of its potential returns per unit of risk. American Financial Group is currently generating about 0.01 per unit of risk. If you would invest 5,307 in Brookfield Wealth Solutions on September 1, 2024 and sell it today you would earn a total of 832.00 from holding Brookfield Wealth Solutions or generate 15.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield Wealth Solutions vs. American Financial Group
Performance |
| Timeline |
| Brookfield Wealth |
| American Financial |
Brookfield Wealth and American Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Wealth and American Financial
The main advantage of trading using opposite Brookfield Wealth and American Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Wealth position performs unexpectedly, American Financial 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 American Financial will offset losses from the drop in American Financial's long position.| Brookfield Wealth vs. Planet Fitness | Brookfield Wealth vs. MI Homes | Brookfield Wealth vs. Life Time Group | Brookfield Wealth vs. Franklin Street Properties |
| American Financial vs. American Financial Group | American Financial vs. American Financial Group | American Financial vs. American Financial Group | American Financial vs. Aegon Funding |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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