Correlation Between Brookfield Office and American Hotel
Can any of the company-specific risk be diversified away by investing in both Brookfield Office and American Hotel 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 Hotel 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 Hotel Income, you can compare the effects of market volatilities on Brookfield Office and American Hotel 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 Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Office and American Hotel.
Diversification Opportunities for Brookfield Office and American Hotel
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Brookfield and American is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Office Properties and American Hotel Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Hotel Income 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 Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Hotel Income has no effect on the direction of Brookfield Office i.e., Brookfield Office and American Hotel go up and down completely randomly.
Pair Corralation between Brookfield Office and American Hotel
Assuming the 90 days trading horizon Brookfield Office Properties is expected to generate 0.16 times more return on investment than American Hotel. However, Brookfield Office Properties is 6.45 times less risky than American Hotel. It trades about 0.21 of its potential returns per unit of risk. American Hotel Income is currently generating about -0.03 per unit of risk. If you would invest 1,686 in Brookfield Office Properties on October 24, 2024 and sell it today you would earn a total of 93.00 from holding Brookfield Office Properties or generate 5.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield Office Properties vs. American Hotel Income
Performance |
| Timeline |
| Brookfield Office |
| American Hotel Income |
Brookfield Office and American Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Office and American Hotel
The main advantage of trading using opposite Brookfield Office and American Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Office position performs unexpectedly, American Hotel 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 Hotel will offset losses from the drop in American Hotel's long position.| Brookfield Office vs. Quipt Home Medical | Brookfield Office vs. Maple Peak Investments | Brookfield Office vs. Partners Value Investments | Brookfield Office vs. Advent Wireless |
| American Hotel vs. Canadian Utilities Limited | American Hotel vs. Atrium Mortgage Investment | American Hotel vs. Brookfield Office Properties | American Hotel vs. Quipt Home Medical |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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