Correlation Between MDJM and Brookfield Property

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

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

Diversification Opportunities for MDJM and Brookfield Property

-0.39

Correlation Coefficient

MDJM  Brookfield Property

Very good diversification

The 3 months correlation between MDJM and Brookfield is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding MDJM and Brookfield Property Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Property and MDJM 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 MDJM 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 MDJM i.e., MDJM and Brookfield Property go up and down completely randomly.

Pair Corralation between MDJM and Brookfield Property

Given the investment horizon of 90 days MDJM is expected to under-perform the Brookfield Property. In addition to that, MDJM is 5.86 times more volatile than Brookfield Property Partners. It trades about -0.17 of its total potential returns per unit of risk. Brookfield Property Partners is currently generating about 0.1 per unit of volatility. If you would invest  1,475  in Brookfield Property Partners on September 4, 2024 and sell it today you would earn a total of  185.00  from holding Brookfield Property Partners or generate 12.54% return on investment over 90 days.

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

MDJM  vs.  Brookfield Property Partners

MDJM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MDJM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward-looking indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 MDJM and Brookfield Property

The main advantage of trading using opposite MDJM and Brookfield Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MDJM 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 MDJM 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.