Correlation Between Brookfield Office and AMERICAN EXPRESS
Can any of the company-specific risk be diversified away by investing in both Brookfield Office and AMERICAN EXPRESS 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 AMERICAN EXPRESS 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 AMERICAN EXPRESS CDR, you can compare the effects of market volatilities on Brookfield Office and AMERICAN EXPRESS 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 AMERICAN EXPRESS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Office and AMERICAN EXPRESS.
Diversification Opportunities for Brookfield Office and AMERICAN EXPRESS
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Brookfield and AMERICAN is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Office Properties and AMERICAN EXPRESS CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMERICAN EXPRESS CDR 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 AMERICAN EXPRESS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMERICAN EXPRESS CDR has no effect on the direction of Brookfield Office i.e., Brookfield Office and AMERICAN EXPRESS go up and down completely randomly.
Pair Corralation between Brookfield Office and AMERICAN EXPRESS
Assuming the 90 days trading horizon Brookfield Office is expected to generate 11.34 times less return on investment than AMERICAN EXPRESS. But when comparing it to its historical volatility, Brookfield Office Properties is 1.09 times less risky than AMERICAN EXPRESS. It trades about 0.01 of its potential returns per unit of risk. AMERICAN EXPRESS CDR is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,377 in AMERICAN EXPRESS CDR on August 30, 2024 and sell it today you would earn a total of 307.00 from holding AMERICAN EXPRESS CDR or generate 12.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 9.9% |
| Values | Daily Returns |
Brookfield Office Properties vs. AMERICAN EXPRESS CDR
Performance |
| Timeline |
| Brookfield Office |
| AMERICAN EXPRESS CDR |
Brookfield Office and AMERICAN EXPRESS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Office and AMERICAN EXPRESS
The main advantage of trading using opposite Brookfield Office and AMERICAN EXPRESS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Office position performs unexpectedly, AMERICAN EXPRESS 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 EXPRESS will offset losses from the drop in AMERICAN EXPRESS's long position.| Brookfield Office vs. Walmart Inc CDR | Brookfield Office vs. Amazon CDR | Brookfield Office vs. Berkshire Hathaway CDR | Brookfield Office vs. UnitedHealth Group CDR |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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