Correlation Between Buhler Industries and Brookfield
Can any of the company-specific risk be diversified away by investing in both Buhler Industries and Brookfield 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 Buhler Industries and Brookfield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Buhler Industries and Brookfield, you can compare the effects of market volatilities on Buhler Industries and Brookfield 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 Buhler Industries with a short position of Brookfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buhler Industries and Brookfield.
Diversification Opportunities for Buhler Industries and Brookfield
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Buhler and Brookfield is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Buhler Industries and Brookfield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield and Buhler Industries 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 Buhler Industries are associated (or correlated) with Brookfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield has no effect on the direction of Buhler Industries i.e., Buhler Industries and Brookfield go up and down completely randomly.
Pair Corralation between Buhler Industries and Brookfield
Assuming the 90 days trading horizon Buhler Industries is expected to generate 0.94 times more return on investment than Brookfield. However, Buhler Industries is 1.06 times less risky than Brookfield. It trades about 0.24 of its potential returns per unit of risk. Brookfield is currently generating about 0.19 per unit of risk. If you would invest 315.00 in Buhler Industries on November 5, 2024 and sell it today you would earn a total of 30.00 from holding Buhler Industries or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Buhler Industries vs. Brookfield
Performance |
| Timeline |
| Buhler Industries |
| Brookfield |
Buhler Industries and Brookfield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Buhler Industries and Brookfield
The main advantage of trading using opposite Buhler Industries and Brookfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buhler Industries position performs unexpectedly, Brookfield 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 Brookfield will offset losses from the drop in Brookfield's long position.| Buhler Industries vs. Clarke Inc | Buhler Industries vs. Accord Financial Corp | Buhler Industries vs. ADF Group | Buhler Industries vs. Algoma Central |
| Brookfield vs. Brookfield Asset Management | Brookfield vs. Alimentation Couchen Tard | Brookfield vs. Brookfield Infrastructure Partners | Brookfield vs. Brookfield Infrastructure Corp |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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