Correlation Between Brookfield Real and MFS Investment
Can any of the company-specific risk be diversified away by investing in both Brookfield Real and MFS Investment 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 Brookfield Real and MFS Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookfield Real Assets and MFS Investment Grade, you can compare the effects of market volatilities on Brookfield Real and MFS Investment 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 Brookfield Real with a short position of MFS Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Real and MFS Investment.
Diversification Opportunities for Brookfield Real and MFS Investment
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brookfield and MFS is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Real Assets and MFS Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Investment Grade and Brookfield Real 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 Brookfield Real Assets are associated (or correlated) with MFS Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Investment Grade has no effect on the direction of Brookfield Real i.e., Brookfield Real and MFS Investment go up and down completely randomly.
Pair Corralation between Brookfield Real and MFS Investment
Allowing for the 90-day total investment horizon Brookfield Real Assets is expected to generate 1.09 times more return on investment than MFS Investment. However, Brookfield Real is 1.09 times more volatile than MFS Investment Grade. It trades about 0.11 of its potential returns per unit of risk. MFS Investment Grade is currently generating about 0.06 per unit of risk. If you would invest 1,301 in Brookfield Real Assets on August 28, 2024 and sell it today you would earn a total of 42.00 from holding Brookfield Real Assets or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield Real Assets vs. MFS Investment Grade
Performance |
| Timeline |
| Brookfield Real Assets |
| MFS Investment Grade |
Brookfield Real and MFS Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Real and MFS Investment
The main advantage of trading using opposite Brookfield Real and MFS Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Real position performs unexpectedly, MFS Investment 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 MFS Investment will offset losses from the drop in MFS Investment's long position.| Brookfield Real vs. Pimco Dynamic Income | Brookfield Real vs. Pimco Corporate Income | Brookfield Real vs. Cornerstone Strategic Value | Brookfield Real vs. Cornerstone Strategic Return |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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