Correlation Between Western Investment and Brookfield Office
Can any of the company-specific risk be diversified away by investing in both Western Investment 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 Western Investment and Brookfield Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Investment and Brookfield Office Properties, you can compare the effects of market volatilities on Western Investment 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 Western Investment with a short position of Brookfield Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Investment and Brookfield Office.
Diversification Opportunities for Western Investment and Brookfield Office
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Western and Brookfield is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Western Investment and Brookfield Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Office and Western Investment 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 Western Investment 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 Western Investment i.e., Western Investment and Brookfield Office go up and down completely randomly.
Pair Corralation between Western Investment and Brookfield Office
Given the investment horizon of 90 days Western Investment is expected to generate 1.44 times less return on investment than Brookfield Office. In addition to that, Western Investment is 4.46 times more volatile than Brookfield Office Properties. It trades about 0.05 of its total potential returns per unit of risk. Brookfield Office Properties is currently generating about 0.35 per unit of volatility. If you would invest 1,726 in Brookfield Office Properties on September 12, 2024 and sell it today you would earn a total of 435.00 from holding Brookfield Office Properties or generate 25.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Investment vs. Brookfield Office Properties
Performance |
| Timeline |
| Western Investment |
| Brookfield Office |
Western Investment and Brookfield Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Investment and Brookfield Office
The main advantage of trading using opposite Western Investment and Brookfield Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Investment 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.| Western Investment vs. Westshore Terminals Investment | Western Investment vs. Faction Investment Group | Western Investment vs. Economic Investment Trust | Western Investment vs. CNJ Capital Investments |
| Brookfield Office vs. Canlan Ice Sports | Brookfield Office vs. Verizon Communications CDR | Brookfield Office vs. Forsys Metals Corp | Brookfield Office vs. MTY Food Group |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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