Correlation Between Carlyle Secured and Brookfield Corp

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

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

Diversification Opportunities for Carlyle Secured and Brookfield Corp

0.26

Correlation Coefficient

Carlyle Secured  Brookfield Corp

Modest diversification

The 3 months correlation between Carlyle and Brookfield is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Secured Lending and Brookfield Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Corp and Carlyle Secured 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 Carlyle Secured Lending are associated (or correlated) with Brookfield Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Corp has no effect on the direction of Carlyle Secured i.e., Carlyle Secured and Brookfield Corp go up and down completely randomly.

Pair Corralation between Carlyle Secured and Brookfield Corp

Given the investment horizon of 90 days Carlyle Secured is expected to generate 4.08 times less return on investment than Brookfield Corp. But when comparing it to its historical volatility, Carlyle Secured Lending is 1.55 times less risky than Brookfield Corp. It trades about 0.08 of its potential returns per unit of risk. Brookfield Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  5,020  in Brookfield Corp on August 30, 2024 and sell it today you would earn a total of  1,117  from holding Brookfield Corp or generate 22.25% return on investment over 90 days.

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

Carlyle Secured Lending  vs.  Brookfield Corp

Carlyle Secured Lending

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carlyle Secured Lending are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Carlyle Secured is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Brookfield Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Brookfield Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carlyle Secured and Brookfield Corp

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

The idea behind Carlyle Secured Lending and Brookfield Corp 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.