Correlation Between Brookfield Business and Colliers International

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

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

Diversification Opportunities for Brookfield Business and Colliers International

0.68

Correlation Coefficient

Brookfield Business  Colliers International

Poor diversification

The 3 months correlation between Brookfield and Colliers is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Partners and Colliers International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colliers International and Brookfield Business 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 Brookfield Business Partners are associated (or correlated) with Colliers International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colliers International has no effect on the direction of Brookfield Business i.e., Brookfield Business and Colliers International go up and down completely randomly.

Pair Corralation between Brookfield Business and Colliers International

Assuming the 90 days trading horizon Brookfield Business Partners is expected to generate 1.49 times more return on investment than Colliers International. However, Brookfield Business is 1.49 times more volatile than Colliers International Group. It trades about 0.24 of its potential returns per unit of risk. Colliers International Group is currently generating about 0.14 per unit of risk. If you would invest  2,648  in Brookfield Business Partners on September 5, 2024 and sell it today you would earn a total of  980.00  from holding Brookfield Business Partners or generate 37.01% return on investment over 90 days.

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

Brookfield Business Partners  vs.  Colliers International Group

Brookfield Business

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Business Partners are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Brookfield Business sustained solid returns over the last few months and may actually be approaching a breakup point.

Colliers International

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Colliers International Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Colliers International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brookfield Business and Colliers International

The main advantage of trading using opposite Brookfield Business and Colliers International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Business position performs unexpectedly, Colliers International 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 Colliers International will offset losses from the drop in Colliers International's long position.

The idea behind Brookfield Business Partners and Colliers International Group 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.