Correlation Between Brookfield Investments and Senvest Capital

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

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

Diversification Opportunities for Brookfield Investments and Senvest Capital

0.19

Correlation Coefficient

Brookfield Investments  Senvest Capital

Average diversification

The 3 months correlation between Brookfield and Senvest is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Investments and Senvest Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senvest Capital and Brookfield Investments 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 Investments are associated (or correlated) with Senvest Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senvest Capital has no effect on the direction of Brookfield Investments i.e., Brookfield Investments and Senvest Capital go up and down completely randomly.

Pair Corralation between Brookfield Investments and Senvest Capital

Assuming the 90 days trading horizon Brookfield Investments is expected to generate 4.02 times less return on investment than Senvest Capital. But when comparing it to its historical volatility, Brookfield Investments is 1.25 times less risky than Senvest Capital. It trades about 0.06 of its potential returns per unit of risk. Senvest Capital is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  32,800  in Senvest Capital on September 19, 2024 and sell it today you would earn a total of  2,200  from holding Senvest Capital or generate 6.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	55.56%
Values	Daily Returns

Brookfield Investments  vs.  Senvest Capital

Brookfield Investments

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Investments are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Brookfield Investments is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Senvest Capital

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Senvest Capital are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, Senvest Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Brookfield Investments and Senvest Capital

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

The idea behind Brookfield Investments and Senvest Capital 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.