Correlation Between Brookfield Business and Beam Global

Can any of the company-specific risk be diversified away by investing in both Brookfield Business and Beam Global 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 Beam Global 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 Beam Global, you can compare the effects of market volatilities on Brookfield Business and Beam Global 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 Beam Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Business and Beam Global.

Diversification Opportunities for Brookfield Business and Beam Global

-0.72

Correlation Coefficient

Brookfield Business  Beam Global

Pay attention - limited upside

The 3 months correlation between Brookfield and Beam is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Partners and Beam Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beam Global 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 Beam Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beam Global has no effect on the direction of Brookfield Business i.e., Brookfield Business and Beam Global go up and down completely randomly.

Pair Corralation between Brookfield Business and Beam Global

Considering the 90-day investment horizon Brookfield Business Partners is expected to generate 0.47 times more return on investment than Beam Global. However, Brookfield Business Partners is 2.11 times less risky than Beam Global. It trades about -0.01 of its potential returns per unit of risk. Beam Global is currently generating about -0.46 per unit of risk. If you would invest  2,445  in Brookfield Business Partners on September 14, 2024 and sell it today you would lose (16.00) from holding Brookfield Business Partners or give up 0.65% of portfolio value over 90 days.

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

Brookfield Business Partners  vs.  Beam Global

Brookfield Business

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Business Partners are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, Brookfield Business unveiled solid returns over the last few months and may actually be approaching a breakup point.

Beam Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beam Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Brookfield Business and Beam Global

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

The idea behind Brookfield Business Partners and Beam Global 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.