Correlation Between Affiliated Managers and Brookfield Business

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

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

Diversification Opportunities for Affiliated Managers and Brookfield Business

-0.05

Correlation Coefficient

Affiliated Managers  Brookfield Business

Good diversification

The 3 months correlation between Affiliated and Brookfield is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Affiliated Managers Group 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 Affiliated Managers 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 Affiliated Managers Group 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 Affiliated Managers i.e., Affiliated Managers and Brookfield Business go up and down completely randomly.

Pair Corralation between Affiliated Managers and Brookfield Business

Considering the 90-day investment horizon Affiliated Managers Group is expected to generate 0.93 times more return on investment than Brookfield Business. However, Affiliated Managers Group is 1.08 times less risky than Brookfield Business. It trades about 0.06 of its potential returns per unit of risk. Brookfield Business Corp is currently generating about -0.05 per unit of risk. If you would invest  17,779  in Affiliated Managers Group on September 29, 2024 and sell it today you would earn a total of  985.00  from holding Affiliated Managers Group or generate 5.54% return on investment over 90 days.

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

Affiliated Managers Group  vs.  Brookfield Business Corp

Affiliated Managers

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Affiliated Managers Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent primary indicators, Affiliated Managers may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Brookfield Business Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brookfield Business Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Affiliated Managers and Brookfield Business

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

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.