Correlation Between Galore Resources and Brookfield Investments

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

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

Diversification Opportunities for Galore Resources and Brookfield Investments

-0.21

Correlation Coefficient

Galore Resources  Brookfield Investments

Very good diversification

The 3 months correlation between Galore and Brookfield is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Galore Resources and Brookfield Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Investments and Galore Resources 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 Galore Resources are associated (or correlated) with Brookfield Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Investments has no effect on the direction of Galore Resources i.e., Galore Resources and Brookfield Investments go up and down completely randomly.

Pair Corralation between Galore Resources and Brookfield Investments

Assuming the 90 days horizon Galore Resources is expected to generate 72.88 times more return on investment than Brookfield Investments. However, Galore Resources is 72.88 times more volatile than Brookfield Investments. It trades about 0.08 of its potential returns per unit of risk. Brookfield Investments is currently generating about 0.04 per unit of risk. If you would invest  2.00  in Galore Resources on September 27, 2024 and sell it today you would lose (1.00) from holding Galore Resources or give up 50.0% of portfolio value over 90 days.

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

Galore Resources  vs.  Brookfield Investments

Galore Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Galore Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Galore Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Brookfield Investments

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Investments are ranked lower than 3 (%) 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.

Pair Trading with Galore Resources and Brookfield Investments

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

The idea behind Galore Resources and Brookfield Investments 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.