Correlation Between La Rosa and Brookfield Property

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

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

Diversification Opportunities for La Rosa and Brookfield Property

-0.63

Correlation Coefficient

La Rosa  Brookfield Property

Excellent diversification

The 3 months correlation between LRHC and Brookfield is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding La Rosa Holdings and Brookfield Property Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Property and La Rosa 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 La Rosa Holdings are associated (or correlated) with Brookfield Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Property has no effect on the direction of La Rosa i.e., La Rosa and Brookfield Property go up and down completely randomly.

Pair Corralation between La Rosa and Brookfield Property

Given the investment horizon of 90 days La Rosa Holdings is expected to generate 8.42 times more return on investment than Brookfield Property. However, La Rosa is 8.42 times more volatile than Brookfield Property Partners. It trades about 0.02 of its potential returns per unit of risk. Brookfield Property Partners is currently generating about 0.1 per unit of risk. If you would invest  99.00  in La Rosa Holdings on September 4, 2024 and sell it today you would lose (28.00) from holding La Rosa Holdings or give up 28.28% of portfolio value over 90 days.

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

La Rosa Holdings  vs.  Brookfield Property Partners

La Rosa Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in La Rosa Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical indicators, La Rosa exhibited solid returns over the last few months and may actually be approaching a breakup point.

Brookfield Property

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Property Partners are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Brookfield Property reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with La Rosa and Brookfield Property

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

The idea behind La Rosa Holdings and Brookfield Property Partners 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.