Correlation Between Eco Atlantic and Brookfield Business
Can any of the company-specific risk be diversified away by investing in both Eco Atlantic 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 Eco Atlantic and Brookfield Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eco Atlantic Oil and Brookfield Business Corp, you can compare the effects of market volatilities on Eco Atlantic 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 Eco Atlantic with a short position of Brookfield Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eco Atlantic and Brookfield Business.
Diversification Opportunities for Eco Atlantic and Brookfield Business
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eco and Brookfield is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Eco Atlantic Oil 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 Eco Atlantic 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 Eco Atlantic Oil 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 Eco Atlantic i.e., Eco Atlantic and Brookfield Business go up and down completely randomly.
Pair Corralation between Eco Atlantic and Brookfield Business
Assuming the 90 days horizon Eco Atlantic Oil is expected to under-perform the Brookfield Business. In addition to that, Eco Atlantic is 1.52 times more volatile than Brookfield Business Corp. It trades about -0.04 of its total potential returns per unit of risk. Brookfield Business Corp is currently generating about 0.13 per unit of volatility. If you would invest 2,752 in Brookfield Business Corp on September 3, 2024 and sell it today you would earn a total of 1,164 from holding Brookfield Business Corp or generate 42.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eco Atlantic Oil vs. Brookfield Business Corp
Performance |
| Timeline |
| Eco Atlantic Oil |
| Brookfield Business Corp |
Eco Atlantic and Brookfield Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eco Atlantic and Brookfield Business
The main advantage of trading using opposite Eco Atlantic and Brookfield Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eco Atlantic 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.| Eco Atlantic vs. CGX Energy | Eco Atlantic vs. Africa Oil Corp | Eco Atlantic vs. Africa Energy Corp | Eco Atlantic vs. Valeura Energy |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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