Correlation Between Brookfield Office and Lion One
Can any of the company-specific risk be diversified away by investing in both Brookfield Office and Lion One 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 Lion One 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 Lion One Metals, you can compare the effects of market volatilities on Brookfield Office and Lion One 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 Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Office and Lion One.
Diversification Opportunities for Brookfield Office and Lion One
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Brookfield and Lion is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Office Properties and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals 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 Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Brookfield Office i.e., Brookfield Office and Lion One go up and down completely randomly.
Pair Corralation between Brookfield Office and Lion One
Assuming the 90 days trading horizon Brookfield Office Properties is expected to generate 0.43 times more return on investment than Lion One. However, Brookfield Office Properties is 2.35 times less risky than Lion One. It trades about 0.02 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.02 per unit of risk. If you would invest 1,684 in Brookfield Office Properties on November 5, 2024 and sell it today you would earn a total of 115.00 from holding Brookfield Office Properties or generate 6.83% 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. Lion One Metals
Performance |
| Timeline |
| Brookfield Office |
| Lion One Metals |
Brookfield Office and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Office and Lion One
The main advantage of trading using opposite Brookfield Office and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Office position performs unexpectedly, Lion One 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 Lion One will offset losses from the drop in Lion One's long position.| Brookfield Office vs. Economic Investment Trust | Brookfield Office vs. Maple Peak Investments | Brookfield Office vs. Canadian General Investments | Brookfield Office vs. Andean Precious Metals |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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