Correlation Between Brookfield Office and Visa

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

Diversification Opportunities for Brookfield Office and Visa

0.69

Correlation Coefficient

Brookfield Office  Visa

Poor diversification

The 3 months correlation between Brookfield and Visa is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Office Properties and Visa Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Inc CDR 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 Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Inc CDR has no effect on the direction of Brookfield Office i.e., Brookfield Office and Visa go up and down completely randomly.

Pair Corralation between Brookfield Office and Visa

Assuming the 90 days trading horizon Brookfield Office is expected to generate 1.05 times less return on investment than Visa. But when comparing it to its historical volatility, Brookfield Office Properties is 1.19 times less risky than Visa. It trades about 0.16 of its potential returns per unit of risk. Visa Inc CDR is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,715  in Visa Inc CDR on September 19, 2024 and sell it today you would earn a total of  306.00  from holding Visa Inc CDR or generate 11.27% return on investment over 90 days.

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

Brookfield Office Properties  vs.  Visa Inc CDR

Brookfield Office

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Office Properties are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Brookfield Office may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Visa Inc CDR

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Inc CDR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Brookfield Office and Visa

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

The idea behind Brookfield Office Properties and Visa Inc CDR 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.