Correlation Between Paramount Resources and Brookfield Asset
Can any of the company-specific risk be diversified away by investing in both Paramount Resources 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 Paramount Resources and Brookfield Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paramount Resources and Brookfield Asset Management, you can compare the effects of market volatilities on Paramount Resources 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 Paramount Resources with a short position of Brookfield Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paramount Resources and Brookfield Asset.
Diversification Opportunities for Paramount Resources and Brookfield Asset
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Paramount and Brookfield is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Paramount Resources 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 Paramount Resources 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 Paramount Resources 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 Paramount Resources i.e., Paramount Resources and Brookfield Asset go up and down completely randomly.
Pair Corralation between Paramount Resources and Brookfield Asset
Assuming the 90 days trading horizon Paramount Resources is expected to generate 2.16 times more return on investment than Brookfield Asset. However, Paramount Resources is 2.16 times more volatile than Brookfield Asset Management. It trades about 0.04 of its potential returns per unit of risk. Brookfield Asset Management is currently generating about 0.04 per unit of risk. If you would invest 2,328 in Paramount Resources on September 12, 2024 and sell it today you would earn a total of 717.00 from holding Paramount Resources or generate 30.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Paramount Resources vs. Brookfield Asset Management
Performance |
| Timeline |
| Paramount Resources |
| Brookfield Asset Man |
Paramount Resources and Brookfield Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paramount Resources and Brookfield Asset
The main advantage of trading using opposite Paramount Resources and Brookfield Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paramount Resources 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.| Paramount Resources vs. Brookfield Asset Management | Paramount Resources vs. AGF Management Limited | Paramount Resources vs. Precision Drilling | Paramount Resources vs. Data Communications Management |
| Brookfield Asset vs. GOLDMAN SACHS CDR | Brookfield Asset vs. Galaxy Digital Holdings | Brookfield Asset vs. Hut 8 Mining | Brookfield Asset vs. Bitfarms |
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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