Correlation Between E L and Brookfield Global

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

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

Diversification Opportunities for E L and Brookfield Global

0.05

Correlation Coefficient

E L  Brookfield Global

Significant diversification

The 3 months correlation between ELF and Brookfield is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial Corp and Brookfield Global Infrastructu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Global and E L 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 E L Financial Corp are associated (or correlated) with Brookfield Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Global has no effect on the direction of E L i.e., E L and Brookfield Global go up and down completely randomly.

Pair Corralation between E L and Brookfield Global

Assuming the 90 days trading horizon E L Financial Corp is expected to generate 1.24 times more return on investment than Brookfield Global. However, E L is 1.24 times more volatile than Brookfield Global Infrastructure. It trades about 0.07 of its potential returns per unit of risk. Brookfield Global Infrastructure is currently generating about 0.07 per unit of risk. If you would invest  130,131  in E L Financial Corp on September 15, 2024 and sell it today you would earn a total of  8,669  from holding E L Financial Corp or generate 6.66% return on investment over 90 days.

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

E L Financial Corp  vs.  Brookfield Global Infrastructu

E L Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in E L Financial Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, E L may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Brookfield Global

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Global Infrastructure are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Brookfield Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with E L and Brookfield Global

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

The idea behind E L Financial Corp and Brookfield Global Infrastructure 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.