Correlation Between Canadian Life and Brookfield Office
Can any of the company-specific risk be diversified away by investing in both Canadian Life 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 Canadian Life and Brookfield Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Life Companies and Brookfield Office Properties, you can compare the effects of market volatilities on Canadian Life 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 Canadian Life with a short position of Brookfield Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Life and Brookfield Office.
Diversification Opportunities for Canadian Life and Brookfield Office
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Canadian and Brookfield is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Life Companies and Brookfield Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Office and Canadian Life 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 Canadian Life Companies 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 Canadian Life i.e., Canadian Life and Brookfield Office go up and down completely randomly.
Pair Corralation between Canadian Life and Brookfield Office
Assuming the 90 days trading horizon Canadian Life is expected to generate 4.17 times less return on investment than Brookfield Office. But when comparing it to its historical volatility, Canadian Life Companies is 4.6 times less risky than Brookfield Office. It trades about 0.26 of its potential returns per unit of risk. Brookfield Office Properties is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,665 in Brookfield Office Properties on October 29, 2024 and sell it today you would earn a total of 91.00 from holding Brookfield Office Properties or generate 5.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Life Companies vs. Brookfield Office Properties
Performance |
| Timeline |
| Canadian Life Companies |
| Brookfield Office |
Canadian Life and Brookfield Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Life and Brookfield Office
The main advantage of trading using opposite Canadian Life and Brookfield Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Life 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.| Canadian Life vs. Mako Mining Corp | Canadian Life vs. Pace Metals | Canadian Life vs. Rogers Communications | Canadian Life vs. Medical Facilities |
| Brookfield Office vs. Prime Dividend Corp | Brookfield Office vs. Canadian Life Companies | Brookfield Office vs. Financial 15 Split | Brookfield Office vs. Dividend 15 Split |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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