Correlation Between Brookfield and PHN Multi

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

By analyzing existing cross correlation between Brookfield and PHN Multi Style All Cap, you can compare the effects of market volatilities on Brookfield and PHN Multi 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 with a short position of PHN Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield and PHN Multi.

Diversification Opportunities for Brookfield and PHN Multi

0.48

Correlation Coefficient

Brookfield  PHN Multi

Very weak diversification

The 3 months correlation between Brookfield and PHN is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield and PHN Multi Style All Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHN Multi Style and Brookfield 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 are associated (or correlated) with PHN Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHN Multi Style has no effect on the direction of Brookfield i.e., Brookfield and PHN Multi go up and down completely randomly.

Pair Corralation between Brookfield and PHN Multi

Assuming the 90 days trading horizon Brookfield is expected to generate 0.41 times more return on investment than PHN Multi. However, Brookfield is 2.42 times less risky than PHN Multi. It trades about 0.14 of its potential returns per unit of risk. PHN Multi Style All Cap is currently generating about -0.02 per unit of risk. If you would invest  2,260  in Brookfield on September 24, 2024 and sell it today you would earn a total of  129.00  from holding Brookfield or generate 5.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Brookfield  vs.  PHN Multi Style All Cap

Brookfield

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Brookfield is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

PHN Multi Style

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PHN Multi Style All Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, PHN Multi is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Brookfield and PHN Multi

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

The idea behind Brookfield and PHN Multi Style All Cap 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.