Correlation Between Brookfield Business and Easterly Acquisition

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

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

Diversification Opportunities for Brookfield Business and Easterly Acquisition

0.0

Correlation Coefficient

Brookfield Business  Easterly Acquisition

Pay attention - limited upside

The 3 months correlation between Brookfield and Easterly is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Partners and Easterly Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Easterly Acquisition Corp and Brookfield Business 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 Brookfield Business Partners are associated (or correlated) with Easterly Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Easterly Acquisition Corp has no effect on the direction of Brookfield Business i.e., Brookfield Business and Easterly Acquisition go up and down completely randomly.

Pair Corralation between Brookfield Business and Easterly Acquisition

If you would invest (100.00) in Easterly Acquisition Corp on February 23, 2024 and sell it today you would earn a total of  100.00  from holding Easterly Acquisition Corp or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Brookfield Business Partners  vs.  Easterly Acquisition Corp

Brookfield Business

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brookfield Business Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Easterly Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Easterly Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Easterly Acquisition is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Brookfield Business and Easterly Acquisition

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

The idea behind Brookfield Business Partners and Easterly Acquisition Corp 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 Transaction History module to view history of all your transactions and understand their impact on performance.