Correlation Between Brookfield Office and Eddy Smart

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

Diversification Opportunities for Brookfield Office and Eddy Smart

-0.85

Correlation Coefficient

Brookfield Office  Eddy Smart

Pay attention - limited upside

The 3 months correlation between Brookfield and Eddy is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Office Properties and Eddy Smart Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eddy Smart Home 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 Eddy Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eddy Smart Home has no effect on the direction of Brookfield Office i.e., Brookfield Office and Eddy Smart go up and down completely randomly.

Pair Corralation between Brookfield Office and Eddy Smart

Assuming the 90 days trading horizon Brookfield Office Properties is expected to generate 0.23 times more return on investment than Eddy Smart. However, Brookfield Office Properties is 4.42 times less risky than Eddy Smart. It trades about 0.27 of its potential returns per unit of risk. Eddy Smart Home is currently generating about -0.15 per unit of risk. If you would invest  1,535  in Brookfield Office Properties on September 15, 2024 and sell it today you would earn a total of  253.00  from holding Brookfield Office Properties or generate 16.48% return on investment over 90 days.

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

Brookfield Office Properties  vs.  Eddy Smart Home

Brookfield Office

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Office Properties are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Brookfield Office sustained solid returns over the last few months and may actually be approaching a breakup point.

Eddy Smart Home

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eddy Smart Home has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Brookfield Office and Eddy Smart

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

The idea behind Brookfield Office Properties and Eddy Smart Home 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.