Correlation Between Brookfield Office and British Amer

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

By analyzing existing cross correlation between Brookfield Office Properties and biOasis Technologies, you can compare the effects of market volatilities on Brookfield Office and British Amer 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 Office with a short position of British Amer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Office and British Amer.

Diversification Opportunities for Brookfield Office and British Amer

-0.27

Correlation Coefficient

Brookfield Office  British Amer

Very good diversification

The 3 months correlation between Brookfield and British is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Office Properties and biOasis Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on biOasis Technologies and Brookfield Office 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 Office Properties are associated (or correlated) with British Amer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of biOasis Technologies has no effect on the direction of Brookfield Office i.e., Brookfield Office and British Amer go up and down completely randomly.

Pair Corralation between Brookfield Office and British Amer

Assuming the 90 days trading horizon Brookfield Office is expected to generate 288.27 times less return on investment than British Amer. But when comparing it to its historical volatility, Brookfield Office Properties is 71.55 times less risky than British Amer. It trades about 0.03 of its potential returns per unit of risk. biOasis Technologies is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  5.00  in biOasis Technologies on September 13, 2024 and sell it today you would earn a total of  119.00  from holding biOasis Technologies or generate 2380.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

Brookfield Office Properties  vs.  biOasis Technologies

Brookfield Office

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Office Properties are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Brookfield Office sustained solid returns over the last few months and may actually be approaching a breakup point.

biOasis Technologies

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in biOasis Technologies are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, British Amer showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brookfield Office and British Amer

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

The idea behind Brookfield Office Properties and biOasis Technologies 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 Valuation module to check real value of public entities based on technical and fundamental data.