Correlation Between Arbor Metals and Brookfield Business

Can any of the company-specific risk be diversified away by investing in both Arbor Metals 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 Arbor Metals and Brookfield Business into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arbor Metals Corp and Brookfield Business Corp, you can compare the effects of market volatilities on Arbor Metals 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 Arbor Metals with a short position of Brookfield Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Metals and Brookfield Business.

Diversification Opportunities for Arbor Metals and Brookfield Business

-0.68

Correlation Coefficient

Arbor Metals  Brookfield Business

Excellent diversification

The 3 months correlation between Arbor and Brookfield is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Metals Corp and Brookfield Business Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Business Corp and Arbor Metals 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 Arbor Metals Corp 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 Corp has no effect on the direction of Arbor Metals i.e., Arbor Metals and Brookfield Business go up and down completely randomly.

Pair Corralation between Arbor Metals and Brookfield Business

Assuming the 90 days horizon Arbor Metals Corp is expected to under-perform the Brookfield Business. In addition to that, Arbor Metals is 1.56 times more volatile than Brookfield Business Corp. It trades about -0.23 of its total potential returns per unit of risk. Brookfield Business Corp is currently generating about 0.13 per unit of volatility. If you would invest  3,139  in Brookfield Business Corp on September 18, 2024 and sell it today you would earn a total of  526.00  from holding Brookfield Business Corp or generate 16.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Arbor Metals Corp  vs.  Brookfield Business Corp

Arbor Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arbor Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Brookfield Business Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Business Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Brookfield Business displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arbor Metals and Brookfield Business

The main advantage of trading using opposite Arbor Metals and Brookfield Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbor Metals 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.

The idea behind Arbor Metals Corp and Brookfield Business Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.