Correlation Between Brookfield Office and Income Financial
Can any of the company-specific risk be diversified away by investing in both Brookfield Office and Income Financial 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 Income Financial 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 Income Financial Trust, you can compare the effects of market volatilities on Brookfield Office and Income Financial 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 Income Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Office and Income Financial.
Diversification Opportunities for Brookfield Office and Income Financial
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Brookfield and Income is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Office Properties and Income Financial Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Financial Trust 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 Income Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Financial Trust has no effect on the direction of Brookfield Office i.e., Brookfield Office and Income Financial go up and down completely randomly.
Pair Corralation between Brookfield Office and Income Financial
Assuming the 90 days trading horizon Brookfield Office is expected to generate 2.75 times less return on investment than Income Financial. But when comparing it to its historical volatility, Brookfield Office Properties is 1.35 times less risky than Income Financial. It trades about 0.18 of its potential returns per unit of risk. Income Financial Trust is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 827.00 in Income Financial Trust on August 30, 2024 and sell it today you would earn a total of 68.00 from holding Income Financial Trust or generate 8.22% 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. Income Financial Trust
Performance |
| Timeline |
| Brookfield Office |
| Income Financial Trust |
Brookfield Office and Income Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Office and Income Financial
The main advantage of trading using opposite Brookfield Office and Income Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Office position performs unexpectedly, Income Financial 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 Income Financial will offset losses from the drop in Income Financial'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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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