Correlation Between Brookfield Office and Walmart
Can any of the company-specific risk be diversified away by investing in both Brookfield Office and Walmart 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 Walmart 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 Walmart Inc CDR, you can compare the effects of market volatilities on Brookfield Office and Walmart 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 Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Office and Walmart.
Diversification Opportunities for Brookfield Office and Walmart
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Brookfield and Walmart is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Office Properties and Walmart Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart Inc 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 Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart Inc CDR has no effect on the direction of Brookfield Office i.e., Brookfield Office and Walmart go up and down completely randomly.
Pair Corralation between Brookfield Office and Walmart
Assuming the 90 days trading horizon Brookfield Office is expected to generate 7.85 times less return on investment than Walmart. But when comparing it to its historical volatility, Brookfield Office Properties is 1.47 times less risky than Walmart. It trades about 0.06 of its potential returns per unit of risk. Walmart Inc CDR is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 3,570 in Walmart Inc CDR on August 23, 2024 and sell it today you would earn a total of 274.00 from holding Walmart Inc CDR or generate 7.68% 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. Walmart Inc CDR
Performance |
| Timeline |
| Brookfield Office |
| Walmart Inc CDR |
Brookfield Office and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Office and Walmart
The main advantage of trading using opposite Brookfield Office and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Office position performs unexpectedly, Walmart 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 Walmart will offset losses from the drop in Walmart's long position.| Brookfield Office vs. Brookfield Infrastructure Partners | Brookfield Office vs. Forstrong Global Income | Brookfield Office vs. BMO Aggregate Bond | Brookfield Office vs. iShares Canadian HYBrid |
| Walmart vs. Solid Impact Investments | Walmart vs. Westshore Terminals Investment | Walmart vs. Renoworks Software | Walmart vs. Brookfield Office Properties |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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