Correlation Between Brookfield Real and New America
Can any of the company-specific risk be diversified away by investing in both Brookfield Real and New America 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 New America 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 New America High, you can compare the effects of market volatilities on Brookfield Real and New America 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 New America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Real and New America.
Diversification Opportunities for Brookfield Real and New America
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brookfield and New is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Real Assets and New America High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New America High 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 New America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New America High has no effect on the direction of Brookfield Real i.e., Brookfield Real and New America go up and down completely randomly.
Pair Corralation between Brookfield Real and New America
Allowing for the 90-day total investment horizon Brookfield Real is expected to generate 1.48 times less return on investment than New America. But when comparing it to its historical volatility, Brookfield Real Assets is 1.33 times less risky than New America. It trades about 0.11 of its potential returns per unit of risk. New America High is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 684.00 in New America High on October 22, 2024 and sell it today you would earn a total of 138.00 from holding New America High or generate 20.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.56% |
| Values | Daily Returns |
Brookfield Real Assets vs. New America High
Performance |
| Timeline |
| Brookfield Real Assets |
| New America High |
Brookfield Real and New America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Real and New America
The main advantage of trading using opposite Brookfield Real and New America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Real position performs unexpectedly, New America 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 New America will offset losses from the drop in New America'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 |
| New America vs. Pioneer Municipal High | New America vs. DWS Municipal Income | New America vs. RiverNorth Specialty Finance | New America vs. Putnam Managed Municipal |
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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