Correlation Between American Hotel and Brookfield Asset
Can any of the company-specific risk be diversified away by investing in both American Hotel and Brookfield Asset 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 American Hotel and Brookfield Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Hotel Income and Brookfield Asset Management, you can compare the effects of market volatilities on American Hotel and Brookfield Asset 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 American Hotel with a short position of Brookfield Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Hotel and Brookfield Asset.
Diversification Opportunities for American Hotel and Brookfield Asset
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Brookfield is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding American Hotel Income and Brookfield Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Asset Man and American Hotel 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 American Hotel Income are associated (or correlated) with Brookfield Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Asset Man has no effect on the direction of American Hotel i.e., American Hotel and Brookfield Asset go up and down completely randomly.
Pair Corralation between American Hotel and Brookfield Asset
Assuming the 90 days trading horizon American Hotel Income is expected to generate 10.5 times more return on investment than Brookfield Asset. However, American Hotel is 10.5 times more volatile than Brookfield Asset Management. It trades about 0.25 of its potential returns per unit of risk. Brookfield Asset Management is currently generating about 0.26 per unit of risk. If you would invest 50.00 in American Hotel Income on October 22, 2024 and sell it today you would earn a total of 13.00 from holding American Hotel Income or generate 26.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Hotel Income vs. Brookfield Asset Management
Performance |
| Timeline |
| American Hotel Income |
| Brookfield Asset Man |
American Hotel and Brookfield Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Hotel and Brookfield Asset
The main advantage of trading using opposite American Hotel and Brookfield Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Hotel position performs unexpectedly, Brookfield Asset 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 Asset will offset losses from the drop in Brookfield Asset's long position.| American Hotel vs. Brookfield Asset Management | American Hotel vs. Profound Medical Corp | American Hotel vs. Element Fleet Management | American Hotel vs. SalesforceCom CDR |
| Brookfield Asset vs. CVW CleanTech | Brookfield Asset vs. UnitedHealth Group CDR | Brookfield Asset vs. Diamond Estates Wines | Brookfield Asset vs. Xtract One Technologies |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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