Correlation Between Brookfield Business and QC Copper

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

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

Diversification Opportunities for Brookfield Business and QC Copper

-0.24

Correlation Coefficient

Brookfield Business  QC Copper

Very good diversification

The 3 months correlation between Brookfield and QCCU is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Corp and QC Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QC Copper 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 Corp are associated (or correlated) with QC Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QC Copper has no effect on the direction of Brookfield Business i.e., Brookfield Business and QC Copper go up and down completely randomly.

Pair Corralation between Brookfield Business and QC Copper

Assuming the 90 days trading horizon Brookfield Business Corp is expected to generate 0.48 times more return on investment than QC Copper. However, Brookfield Business Corp is 2.08 times less risky than QC Copper. It trades about 0.13 of its potential returns per unit of risk. QC Copper and is currently generating about 0.05 per unit of risk. 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

Brookfield Business Corp  vs.  QC Copper and

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.

QC Copper

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in QC Copper and are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, QC Copper may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Brookfield Business and QC Copper

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

The idea behind Brookfield Business Corp and QC Copper and 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.