Correlation Between E L and Brookfield Business
Can any of the company-specific risk be diversified away by investing in both E L 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 E L and Brookfield Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E L Financial 3 and Brookfield Business Corp, you can compare the effects of market volatilities on E L 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 E L with a short position of Brookfield Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of E L and Brookfield Business.
Diversification Opportunities for E L and Brookfield Business
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ELF-PH and Brookfield is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial 3 and Brookfield Business Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Business Corp and E L 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 E L Financial 3 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 Corp has no effect on the direction of E L i.e., E L and Brookfield Business go up and down completely randomly.
Pair Corralation between E L and Brookfield Business
Assuming the 90 days trading horizon E L is expected to generate 1.3 times less return on investment than Brookfield Business. But when comparing it to its historical volatility, E L Financial 3 is 5.56 times less risky than Brookfield Business. It trades about 0.2 of its potential returns per unit of risk. Brookfield Business Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,330 in Brookfield Business Corp on October 20, 2024 and sell it today you would earn a total of 56.00 from holding Brookfield Business Corp or generate 1.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
E L Financial 3 vs. Brookfield Business Corp
Performance |
| Timeline |
| E L Financial |
| Brookfield Business Corp |
E L and Brookfield Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E L and Brookfield Business
The main advantage of trading using opposite E L and Brookfield Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E L 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.| E L vs. Mako Mining Corp | E L vs. Verizon Communications CDR | E L vs. WELL Health Technologies | E L vs. Overactive Media Corp |
| Brookfield Business vs. Cogeco Communications | Brookfield Business vs. Monument Mining Limited | Brookfield Business vs. Gatos Silver | Brookfield Business vs. Big Rock Brewery |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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