Correlation Between Brookfield Property and DigitalBridge
Can any of the company-specific risk be diversified away by investing in both Brookfield Property and DigitalBridge 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 Property and DigitalBridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookfield Property Partners and DigitalBridge Group, you can compare the effects of market volatilities on Brookfield Property and DigitalBridge 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 Property with a short position of DigitalBridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Property and DigitalBridge.
Diversification Opportunities for Brookfield Property and DigitalBridge
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Brookfield and DigitalBridge is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Property Partners and DigitalBridge Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DigitalBridge Group and Brookfield Property 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 Property Partners are associated (or correlated) with DigitalBridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DigitalBridge Group has no effect on the direction of Brookfield Property i.e., Brookfield Property and DigitalBridge go up and down completely randomly.
Pair Corralation between Brookfield Property and DigitalBridge
Assuming the 90 days horizon Brookfield Property Partners is expected to generate 1.68 times more return on investment than DigitalBridge. However, Brookfield Property is 1.68 times more volatile than DigitalBridge Group. It trades about -0.06 of its potential returns per unit of risk. DigitalBridge Group is currently generating about -0.22 per unit of risk. If you would invest 1,651 in Brookfield Property Partners on August 29, 2024 and sell it today you would lose (36.00) from holding Brookfield Property Partners or give up 2.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield Property Partners vs. DigitalBridge Group
Performance |
| Timeline |
| Brookfield Property |
| DigitalBridge Group |
Brookfield Property and DigitalBridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Property and DigitalBridge
The main advantage of trading using opposite Brookfield Property and DigitalBridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Property position performs unexpectedly, DigitalBridge 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 DigitalBridge will offset losses from the drop in DigitalBridge's long position.The idea behind Brookfield Property Partners and DigitalBridge Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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