Correlation Between US Financial and Brookfield Office
Can any of the company-specific risk be diversified away by investing in both US Financial 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 US Financial and Brookfield Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Financial 15 and Brookfield Office Properties, you can compare the effects of market volatilities on US Financial 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 US Financial with a short position of Brookfield Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Financial and Brookfield Office.
Diversification Opportunities for US Financial and Brookfield Office
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FTU-PB and Brookfield is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding US Financial 15 and Brookfield Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Office and US Financial 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 US Financial 15 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 US Financial i.e., US Financial and Brookfield Office go up and down completely randomly.
Pair Corralation between US Financial and Brookfield Office
Assuming the 90 days trading horizon US Financial 15 is expected to generate 1.05 times more return on investment than Brookfield Office. However, US Financial is 1.05 times more volatile than Brookfield Office Properties. It trades about 0.04 of its potential returns per unit of risk. Brookfield Office Properties is currently generating about 0.01 per unit of risk. If you would invest 556.00 in US Financial 15 on August 30, 2024 and sell it today you would earn a total of 198.00 from holding US Financial 15 or generate 35.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Financial 15 vs. Brookfield Office Properties
Performance |
| Timeline |
| US Financial 15 |
| Brookfield Office |
US Financial and Brookfield Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Financial and Brookfield Office
The main advantage of trading using opposite US Financial and Brookfield Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Financial 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.| US Financial vs. North American Financial | US Financial vs. Prime Dividend Corp | US Financial vs. Canadian Life Companies | US Financial vs. Financial 15 Split |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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