Correlation Between Medical Facilities and Brookfield Office
Can any of the company-specific risk be diversified away by investing in both Medical Facilities and Brookfield Office 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 Medical Facilities and Brookfield Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medical Facilities and Brookfield Office Properties, you can compare the effects of market volatilities on Medical Facilities and Brookfield Office 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 Medical Facilities with a short position of Brookfield Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Facilities and Brookfield Office.
Diversification Opportunities for Medical Facilities and Brookfield Office
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Medical and Brookfield is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Medical Facilities and Brookfield Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Office and Medical Facilities 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 Medical Facilities are associated (or correlated) with Brookfield Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Office has no effect on the direction of Medical Facilities i.e., Medical Facilities and Brookfield Office go up and down completely randomly.
Pair Corralation between Medical Facilities and Brookfield Office
Assuming the 90 days horizon Medical Facilities is expected to generate 3.66 times more return on investment than Brookfield Office. However, Medical Facilities is 3.66 times more volatile than Brookfield Office Properties. It trades about 0.19 of its potential returns per unit of risk. Brookfield Office Properties is currently generating about -0.02 per unit of risk. If you would invest 1,462 in Medical Facilities on August 27, 2024 and sell it today you would earn a total of 125.00 from holding Medical Facilities or generate 8.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medical Facilities vs. Brookfield Office Properties
Performance |
| Timeline |
| Medical Facilities |
| Brookfield Office |
Medical Facilities and Brookfield Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Facilities and Brookfield Office
The main advantage of trading using opposite Medical Facilities and Brookfield Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Facilities position performs unexpectedly, Brookfield Office 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 Office will offset losses from the drop in Brookfield Office's long position.| Medical Facilities vs. Extendicare | Medical Facilities vs. Sienna Senior Living | Medical Facilities vs. Rogers Sugar | Medical Facilities vs. Chemtrade Logistics Income |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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