Correlation Between CCL Industries and Brookfield Business
Can any of the company-specific risk be diversified away by investing in both CCL Industries and Brookfield Business 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 CCL Industries and Brookfield Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CCL Industries and Brookfield Business Partners, you can compare the effects of market volatilities on CCL Industries and Brookfield Business 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 CCL Industries with a short position of Brookfield Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of CCL Industries and Brookfield Business.
Diversification Opportunities for CCL Industries and Brookfield Business
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between CCL and Brookfield is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding CCL Industries and Brookfield Business Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Business and CCL 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 CCL Industries are associated (or correlated) with Brookfield Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Business has no effect on the direction of CCL Industries i.e., CCL Industries and Brookfield Business go up and down completely randomly.
Pair Corralation between CCL Industries and Brookfield Business
Assuming the 90 days trading horizon CCL Industries is expected to under-perform the Brookfield Business. But the stock apears to be less risky and, when comparing its historical volatility, CCL Industries is 1.68 times less risky than Brookfield Business. The stock trades about -0.33 of its potential returns per unit of risk. The Brookfield Business Partners is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 2,976 in Brookfield Business Partners on August 29, 2024 and sell it today you would earn a total of 623.00 from holding Brookfield Business Partners or generate 20.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CCL Industries vs. Brookfield Business Partners
Performance |
| Timeline |
| CCL Industries |
| Brookfield Business |
CCL Industries and Brookfield Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CCL Industries and Brookfield Business
The main advantage of trading using opposite CCL Industries and Brookfield Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CCL Industries position performs unexpectedly, Brookfield Business 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 Business will offset losses from the drop in Brookfield Business' long position.| CCL Industries vs. Stella Jones | CCL Industries vs. Gildan Activewear | CCL Industries vs. Toromont Industries | CCL Industries vs. Waste Connections |
| Brookfield Business vs. Premium Income | Brookfield Business vs. E L Financial Corp | Brookfield Business vs. Fairfax Financial Holdings | Brookfield Business vs. Fairfax Fin Hld |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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