Correlation Between Brookfield Office and Royal Canadian
Can any of the company-specific risk be diversified away by investing in both Brookfield Office and Royal Canadian 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 Royal Canadian 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 Royal Canadian Mint, you can compare the effects of market volatilities on Brookfield Office and Royal Canadian 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 Royal Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Office and Royal Canadian.
Diversification Opportunities for Brookfield Office and Royal Canadian
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Brookfield and Royal is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Office Properties and Royal Canadian Mint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Canadian Mint 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 Royal Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Canadian Mint has no effect on the direction of Brookfield Office i.e., Brookfield Office and Royal Canadian go up and down completely randomly.
Pair Corralation between Brookfield Office and Royal Canadian
Assuming the 90 days trading horizon Brookfield Office Properties is expected to generate 0.72 times more return on investment than Royal Canadian. However, Brookfield Office Properties is 1.39 times less risky than Royal Canadian. It trades about 0.22 of its potential returns per unit of risk. Royal Canadian Mint is currently generating about -0.1 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield Office Properties vs. Royal Canadian Mint
Performance |
| Timeline |
| Brookfield Office |
| Royal Canadian Mint |
Brookfield Office and Royal Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Office and Royal Canadian
The main advantage of trading using opposite Brookfield Office and Royal Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Office position performs unexpectedly, Royal Canadian 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 Royal Canadian will offset losses from the drop in Royal Canadian'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 |
| Royal Canadian vs. Royal Canadian Mint | Royal Canadian vs. iShares Gold Bullion | Royal Canadian vs. Sprott Physical Gold | Royal Canadian vs. Purpose Gold Bullion |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |