Correlation Between Lumia and Brookfield Office
Can any of the company-specific risk be diversified away by investing in both Lumia 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 Lumia and Brookfield Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and Brookfield Office Properties, you can compare the effects of market volatilities on Lumia 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 Lumia with a short position of Brookfield Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and Brookfield Office.
Diversification Opportunities for Lumia and Brookfield Office
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lumia and Brookfield is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Brookfield Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Office and Lumia 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 Lumia 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 Lumia i.e., Lumia and Brookfield Office go up and down completely randomly.
Pair Corralation between Lumia and Brookfield Office
Assuming the 90 days trading horizon Lumia is expected to under-perform the Brookfield Office. In addition to that, Lumia is 4.8 times more volatile than Brookfield Office Properties. It trades about -0.37 of its total potential returns per unit of risk. Brookfield Office Properties is currently generating about 0.04 per unit of volatility. If you would invest 1,670 in Brookfield Office Properties on October 12, 2024 and sell it today you would earn a total of 13.00 from holding Brookfield Office Properties or generate 0.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Lumia vs. Brookfield Office Properties
Performance |
| Timeline |
| Lumia |
| Brookfield Office |
Lumia and Brookfield Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumia and Brookfield Office
The main advantage of trading using opposite Lumia and Brookfield Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia 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.The idea behind Lumia and Brookfield Office Properties pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Brookfield Office vs. Partners Value Investments | Brookfield Office vs. Highwood Asset Management | Brookfield Office vs. Westshore Terminals Investment | Brookfield Office vs. Solid Impact Investments |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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