Correlation Between Brookfield Corp and Federated Investors

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

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

Diversification Opportunities for Brookfield Corp and Federated Investors

0.92

Correlation Coefficient

Brookfield Corp  Federated Investors

Almost no diversification

The 3 months correlation between Brookfield and Federated is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Corp and Federated Investors B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Investors and Brookfield Corp 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 Corp are associated (or correlated) with Federated Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Investors has no effect on the direction of Brookfield Corp i.e., Brookfield Corp and Federated Investors go up and down completely randomly.

Pair Corralation between Brookfield Corp and Federated Investors

Allowing for the 90-day total investment horizon Brookfield Corp is expected to generate 1.11 times less return on investment than Federated Investors. In addition to that, Brookfield Corp is 1.31 times more volatile than Federated Investors B. It trades about 0.21 of its total potential returns per unit of risk. Federated Investors B is currently generating about 0.3 per unit of volatility. If you would invest  3,404  in Federated Investors B on August 30, 2024 and sell it today you would earn a total of  880.00  from holding Federated Investors B or generate 25.85% return on investment over 90 days.

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

Brookfield Corp  vs.  Federated Investors B

Brookfield Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Brookfield Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Federated Investors

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Investors B are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical indicators, Federated Investors demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brookfield Corp and Federated Investors

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

The idea behind Brookfield Corp and Federated Investors B 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.