Correlation Between Brookfield Office and FirstService Corp
Can any of the company-specific risk be diversified away by investing in both Brookfield Office and FirstService Corp 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 FirstService Corp 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 FirstService Corp, you can compare the effects of market volatilities on Brookfield Office and FirstService Corp 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 FirstService Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Office and FirstService Corp.
Diversification Opportunities for Brookfield Office and FirstService Corp
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Brookfield and FirstService is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Office Properties and FirstService Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstService 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 FirstService Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstService Corp has no effect on the direction of Brookfield Office i.e., Brookfield Office and FirstService Corp go up and down completely randomly.
Pair Corralation between Brookfield Office and FirstService Corp
Assuming the 90 days trading horizon Brookfield Office is expected to generate 1.63 times less return on investment than FirstService Corp. In addition to that, Brookfield Office is 1.74 times more volatile than FirstService Corp. It trades about 0.04 of its total potential returns per unit of risk. FirstService Corp is currently generating about 0.1 per unit of volatility. If you would invest 20,933 in FirstService Corp on October 12, 2024 and sell it today you would earn a total of 4,755 from holding FirstService Corp or generate 22.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.85% |
| Values | Daily Returns |
Brookfield Office Properties vs. FirstService Corp
Performance |
| Timeline |
| Brookfield Office |
| FirstService Corp |
Brookfield Office and FirstService Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Office and FirstService Corp
The main advantage of trading using opposite Brookfield Office and FirstService Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Office position performs unexpectedly, FirstService Corp 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 FirstService Corp will offset losses from the drop in FirstService Corp's long position.| Brookfield Office vs. NextSource Materials | Brookfield Office vs. Atrium Mortgage Investment | Brookfield Office vs. Diversified Royalty Corp | Brookfield Office vs. Capstone Mining Corp |
| FirstService Corp vs. Colliers International Group | FirstService Corp vs. Altus Group Limited | FirstService Corp vs. CCL Industries | FirstService Corp vs. Ritchie Bros Auctioneers |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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