Correlation Between Brookfield Office and Bip Investment
Can any of the company-specific risk be diversified away by investing in both Brookfield Office and Bip Investment 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 Office and Bip Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookfield Office Properties and Bip Investment Corp, you can compare the effects of market volatilities on Brookfield Office and Bip Investment 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 Office with a short position of Bip Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Office and Bip Investment.
Diversification Opportunities for Brookfield Office and Bip Investment
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brookfield and Bip is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Office Properties and Bip Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bip Investment Corp and Brookfield Office 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 Office Properties are associated (or correlated) with Bip Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bip Investment Corp has no effect on the direction of Brookfield Office i.e., Brookfield Office and Bip Investment go up and down completely randomly.
Pair Corralation between Brookfield Office and Bip Investment
Assuming the 90 days trading horizon Brookfield Office Properties is expected to generate 1.53 times more return on investment than Bip Investment. However, Brookfield Office is 1.53 times more volatile than Bip Investment Corp. It trades about 0.22 of its potential returns per unit of risk. Bip Investment Corp is currently generating about 0.06 per unit of risk. If you would invest 2,000 in Brookfield Office Properties on September 2, 2024 and sell it today you would earn a total of 107.00 from holding Brookfield Office Properties or generate 5.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield Office Properties vs. Bip Investment Corp
Performance |
| Timeline |
| Brookfield Office |
| Bip Investment Corp |
Brookfield Office and Bip Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Office and Bip Investment
The main advantage of trading using opposite Brookfield Office and Bip Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Office position performs unexpectedly, Bip Investment 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 Bip Investment will offset losses from the drop in Bip Investment's long position.| Brookfield Office vs. Royal Canadian Mint | Brookfield Office vs. Cymbria | Brookfield Office vs. BMO Aggregate Bond | Brookfield Office vs. iShares Canadian HYBrid |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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