Correlation Between Greenlight Capital and Brookfield Wealth

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

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

Diversification Opportunities for Greenlight Capital and Brookfield Wealth

0.66

Correlation Coefficient

Greenlight Capital  Brookfield Wealth

Poor diversification

The 3 months correlation between Greenlight and Brookfield is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Greenlight Capital Re and Brookfield Wealth Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Wealth and Greenlight Capital 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 Greenlight Capital Re are associated (or correlated) with Brookfield Wealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Wealth has no effect on the direction of Greenlight Capital i.e., Greenlight Capital and Brookfield Wealth go up and down completely randomly.

Pair Corralation between Greenlight Capital and Brookfield Wealth

Given the investment horizon of 90 days Greenlight Capital is expected to generate 2.55 times less return on investment than Brookfield Wealth. In addition to that, Greenlight Capital is 1.15 times more volatile than Brookfield Wealth Solutions. It trades about 0.09 of its total potential returns per unit of risk. Brookfield Wealth Solutions is currently generating about 0.27 per unit of volatility. If you would invest  4,784  in Brookfield Wealth Solutions on September 2, 2024 and sell it today you would earn a total of  1,355  from holding Brookfield Wealth Solutions or generate 28.32% return on investment over 90 days.

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

Greenlight Capital Re  vs.  Brookfield Wealth Solutions

Greenlight Capital

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Greenlight Capital Re are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Greenlight Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Brookfield Wealth

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Wealth Solutions are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Brookfield Wealth unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Greenlight Capital and Brookfield Wealth

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

The idea behind Greenlight Capital Re and Brookfield Wealth Solutions 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.