Correlation Between International Business and Brookfield
Can any of the company-specific risk be diversified away by investing in both International Business and Brookfield 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 International Business and Brookfield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Business Machines and Brookfield, you can compare the effects of market volatilities on International Business and Brookfield 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 International Business with a short position of Brookfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and Brookfield.
Diversification Opportunities for International Business and Brookfield
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between International and Brookfield is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Brookfield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield and International Business 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 International Business Machines are associated (or correlated) with Brookfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield has no effect on the direction of International Business i.e., International Business and Brookfield go up and down completely randomly.
Pair Corralation between International Business and Brookfield
Assuming the 90 days trading horizon International Business is expected to generate 1.35 times less return on investment than Brookfield. But when comparing it to its historical volatility, International Business Machines is 1.03 times less risky than Brookfield. It trades about 0.22 of its potential returns per unit of risk. Brookfield is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 7,596 in Brookfield on August 28, 2024 and sell it today you would earn a total of 750.00 from holding Brookfield or generate 9.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
International Business Machine vs. Brookfield
Performance |
| Timeline |
| International Business |
| Brookfield |
International Business and Brookfield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and Brookfield
The main advantage of trading using opposite International Business and Brookfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, Brookfield 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 will offset losses from the drop in Brookfield's long position.| International Business vs. Telus Corp | International Business vs. Toronto Dominion Bank | International Business vs. Manulife Financial Corp | International Business vs. Canadian Natural Resources |
| Brookfield vs. Brookfield Asset Management | Brookfield vs. Alimentation Couchen Tard | Brookfield vs. Brookfield Infrastructure Partners | Brookfield vs. Brookfield Infrastructure Corp |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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