Correlation Between Current Water and Brookfield Business
Can any of the company-specific risk be diversified away by investing in both Current Water and Brookfield Business 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 Current Water and Brookfield Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Current Water Technologies and Brookfield Business Partners, you can compare the effects of market volatilities on Current Water and Brookfield Business 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 Current Water with a short position of Brookfield Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Current Water and Brookfield Business.
Diversification Opportunities for Current Water and Brookfield Business
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Current and Brookfield is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Current Water Technologies and Brookfield Business Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Business and Current Water 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 Current Water Technologies are associated (or correlated) with Brookfield Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Business has no effect on the direction of Current Water i.e., Current Water and Brookfield Business go up and down completely randomly.
Pair Corralation between Current Water and Brookfield Business
Assuming the 90 days trading horizon Current Water Technologies is expected to generate 5.78 times more return on investment than Brookfield Business. However, Current Water is 5.78 times more volatile than Brookfield Business Partners. It trades about 0.05 of its potential returns per unit of risk. Brookfield Business Partners is currently generating about 0.08 per unit of risk. If you would invest 4.00 in Current Water Technologies on September 12, 2024 and sell it today you would lose (2.00) from holding Current Water Technologies or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Current Water Technologies vs. Brookfield Business Partners
Performance |
| Timeline |
| Current Water Techno |
| Brookfield Business |
Current Water and Brookfield Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Current Water and Brookfield Business
The main advantage of trading using opposite Current Water and Brookfield Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Current Water position performs unexpectedly, Brookfield Business 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 Business will offset losses from the drop in Brookfield Business' long position.| Current Water vs. Plurilock Security | Current Water vs. PowerBand Solutions | Current Water vs. iShares Canadian HYBrid | Current Water vs. Solar Alliance Energy |
| Brookfield Business vs. Current Water Technologies | Brookfield Business vs. Plurilock Security | Brookfield Business vs. PowerBand Solutions | Brookfield Business vs. iShares Canadian HYBrid |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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