Correlation Between Brookfield Office and Royal Bank
Can any of the company-specific risk be diversified away by investing in both Brookfield Office and Royal Bank 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 Bank 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 Bank of, you can compare the effects of market volatilities on Brookfield Office and Royal Bank 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 Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Office and Royal Bank.
Diversification Opportunities for Brookfield Office and Royal Bank
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brookfield and Royal is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Office Properties and Royal Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Bank 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 Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Bank has no effect on the direction of Brookfield Office i.e., Brookfield Office and Royal Bank go up and down completely randomly.
Pair Corralation between Brookfield Office and Royal Bank
Assuming the 90 days trading horizon Brookfield Office Properties is expected to generate 2.75 times more return on investment than Royal Bank. However, Brookfield Office is 2.75 times more volatile than Royal Bank of. It trades about 0.02 of its potential returns per unit of risk. Royal Bank of is currently generating about 0.05 per unit of risk. If you would invest 1,625 in Brookfield Office Properties on September 26, 2024 and sell it today you would earn a total of 15.00 from holding Brookfield Office Properties or generate 0.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Brookfield Office Properties vs. Royal Bank of
Performance |
| Timeline |
| Brookfield Office |
| Royal Bank |
Brookfield Office and Royal Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Office and Royal Bank
The main advantage of trading using opposite Brookfield Office and Royal Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Office position performs unexpectedly, Royal Bank 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 Bank will offset losses from the drop in Royal Bank's long position.| Brookfield Office vs. Brookfield Infrastructure Partners | Brookfield Office vs. Brookfield Office Properties | Brookfield Office vs. Brookfield Infrastructure Partners |
| Royal Bank vs. Brookfield Infrastructure Partners | Royal Bank vs. Brookfield Office Properties | Royal Bank vs. Brookfield Office Properties | Royal Bank vs. Brookfield Infrastructure Partners |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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