Correlation Between Brookfield Office and American Lithium
Can any of the company-specific risk be diversified away by investing in both Brookfield Office and American Lithium 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 Lithium 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 Lithium Corp, you can compare the effects of market volatilities on Brookfield Office and American Lithium 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 Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Office and American Lithium.
Diversification Opportunities for Brookfield Office and American Lithium
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Brookfield and American is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Office Properties and American Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Lithium Corp 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 Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Lithium Corp has no effect on the direction of Brookfield Office i.e., Brookfield Office and American Lithium go up and down completely randomly.
Pair Corralation between Brookfield Office and American Lithium
Assuming the 90 days trading horizon Brookfield Office is expected to generate 1.57 times less return on investment than American Lithium. But when comparing it to its historical volatility, Brookfield Office Properties is 6.07 times less risky than American Lithium. It trades about 0.14 of its potential returns per unit of risk. American Lithium Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 90.00 in American Lithium Corp on September 3, 2024 and sell it today you would earn a total of 6.00 from holding American Lithium Corp or generate 6.67% 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. American Lithium Corp
Performance |
| Timeline |
| Brookfield Office |
| American Lithium Corp |
Brookfield Office and American Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Office and American Lithium
The main advantage of trading using opposite Brookfield Office and American Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Office position performs unexpectedly, American Lithium 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 Lithium will offset losses from the drop in American Lithium's long position.| Brookfield Office vs. Apple Inc CDR | Brookfield Office vs. Microsoft Corp CDR | Brookfield Office vs. Amazon CDR | Brookfield Office vs. Alphabet Inc CDR |
| American Lithium vs. Brookfield Office Properties | American Lithium vs. Rogers Communications | American Lithium vs. Plaza Retail REIT | American Lithium vs. WELL Health Technologies |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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