Correlation Between Senvest Capital and Brookfield Investments

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

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

Diversification Opportunities for Senvest Capital and Brookfield Investments

0.19

Correlation Coefficient

Senvest Capital  Brookfield Investments

Average diversification

The 3 months correlation between Senvest and Brookfield is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Senvest Capital and Brookfield Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Investments and Senvest 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 Senvest Capital 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 Senvest Capital i.e., Senvest Capital and Brookfield Investments go up and down completely randomly.

Pair Corralation between Senvest Capital and Brookfield Investments

Assuming the 90 days trading horizon Senvest Capital is expected to generate 2.37 times more return on investment than Brookfield Investments. However, Senvest Capital is 2.37 times more volatile than Brookfield Investments. It trades about 0.49 of its potential returns per unit of risk. Brookfield Investments is currently generating about 0.02 per unit of risk. If you would invest  32,500  in Senvest Capital on September 19, 2024 and sell it today you would earn a total of  2,500  from holding Senvest Capital or generate 7.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	59.09%
Values	Daily Returns

Senvest Capital  vs.  Brookfield Investments

Senvest Capital

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Senvest Capital are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, Senvest Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Brookfield Investments

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Investments are ranked lower than 4 (%) 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 Senvest Capital and Brookfield Investments

The main advantage of trading using opposite Senvest Capital and Brookfield Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Senvest Capital 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 Senvest Capital 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.

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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.