Correlation Between Information Services and Brookfield
Can any of the company-specific risk be diversified away by investing in both Information Services 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 Information Services and Brookfield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Information Services and Brookfield, you can compare the effects of market volatilities on Information Services 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 Information Services with a short position of Brookfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Information Services and Brookfield.
Diversification Opportunities for Information Services and Brookfield
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Information and Brookfield is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Information Services and Brookfield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield and Information Services 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 Information Services 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 Information Services i.e., Information Services and Brookfield go up and down completely randomly.
Pair Corralation between Information Services and Brookfield
Assuming the 90 days trading horizon Information Services is expected to generate 8.02 times less return on investment than Brookfield. In addition to that, Information Services is 1.9 times more volatile than Brookfield. It trades about 0.01 of its total potential returns per unit of risk. Brookfield is currently generating about 0.1 per unit of volatility. If you would invest 2,282 in Brookfield on November 2, 2024 and sell it today you would earn a total of 166.00 from holding Brookfield or generate 7.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Information Services vs. Brookfield
Performance |
| Timeline |
| Information Services |
| Brookfield |
Information Services and Brookfield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Information Services and Brookfield
The main advantage of trading using opposite Information Services and Brookfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Information Services 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.| Information Services vs. iA Financial | Information Services vs. Maple Leaf Foods | Information Services vs. Canso Credit Trust | Information Services vs. CI Financial Corp |
| Brookfield vs. Computer Modelling Group | Brookfield vs. Questor Technology | Brookfield vs. Pace Metals | Brookfield vs. Andean Precious Metals |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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