Correlation Between Exxon and Brookfield Office
Can any of the company-specific risk be diversified away by investing in both Exxon 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 Exxon and Brookfield Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EXXON MOBIL CDR and Brookfield Office Properties, you can compare the effects of market volatilities on Exxon 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 Exxon with a short position of Brookfield Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Brookfield Office.
Diversification Opportunities for Exxon and Brookfield Office
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Exxon and Brookfield is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding EXXON MOBIL CDR and Brookfield Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Office and Exxon 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 EXXON MOBIL CDR 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 Exxon i.e., Exxon and Brookfield Office go up and down completely randomly.
Pair Corralation between Exxon and Brookfield Office
Assuming the 90 days trading horizon EXXON MOBIL CDR is expected to under-perform the Brookfield Office. But the stock apears to be less risky and, when comparing its historical volatility, EXXON MOBIL CDR is 1.1 times less risky than Brookfield Office. The stock trades about -0.48 of its potential returns per unit of risk. The Brookfield Office Properties is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 1,680 in Brookfield Office Properties on September 28, 2024 and sell it today you would lose (40.00) from holding Brookfield Office Properties or give up 2.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EXXON MOBIL CDR vs. Brookfield Office Properties
Performance |
| Timeline |
| EXXON MOBIL CDR |
| Brookfield Office |
Exxon and Brookfield Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and Brookfield Office
The main advantage of trading using opposite Exxon and Brookfield Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon 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.| Exxon vs. Jamieson Wellness | Exxon vs. TUT Fitness Group | Exxon vs. Profound Medical Corp | Exxon vs. Nova Leap Health |
| Brookfield Office vs. Brookfield Infrastructure Partners | Brookfield Office vs. Brookfield Office Properties | Brookfield Office vs. Brookfield Infrastructure Partners |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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