Correlation Between Brookfield Office and Lion One

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

Diversification Opportunities for Brookfield Office and Lion One

-0.37

Correlation Coefficient

Brookfield Office  Lion One

Very good diversification

The 3 months correlation between Brookfield and Lion is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Office Properties and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals 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 Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Brookfield Office i.e., Brookfield Office and Lion One go up and down completely randomly.

Pair Corralation between Brookfield Office and Lion One

Assuming the 90 days trading horizon Brookfield Office Properties is expected to generate 0.25 times more return on investment than Lion One. However, Brookfield Office Properties is 4.01 times less risky than Lion One. It trades about 0.33 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.06 per unit of risk. If you would invest  1,514  in Brookfield Office Properties on September 13, 2024 and sell it today you would earn a total of  296.00  from holding Brookfield Office Properties or generate 19.55% return on investment over 90 days.

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

Brookfield Office Properties  vs.  Lion One Metals

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.

Lion One Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lion One Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating 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 Lion One

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

The idea behind Brookfield Office Properties and Lion One Metals 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.