Correlation Between Brookfield Asset and Prospect Capital
Can any of the company-specific risk be diversified away by investing in both Brookfield Asset and Prospect Capital 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 Asset and Prospect Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookfield Asset Management and Prospect Capital, you can compare the effects of market volatilities on Brookfield Asset and Prospect Capital 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 Asset with a short position of Prospect Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Asset and Prospect Capital.
Diversification Opportunities for Brookfield Asset and Prospect Capital
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Brookfield and Prospect is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Asset Management and Prospect Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prospect Capital and Brookfield Asset 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 Asset Management are associated (or correlated) with Prospect Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prospect Capital has no effect on the direction of Brookfield Asset i.e., Brookfield Asset and Prospect Capital go up and down completely randomly.
Pair Corralation between Brookfield Asset and Prospect Capital
Considering the 90-day investment horizon Brookfield Asset Management is expected to under-perform the Prospect Capital. In addition to that, Brookfield Asset is 2.76 times more volatile than Prospect Capital. It trades about -0.1 of its total potential returns per unit of risk. Prospect Capital is currently generating about 0.0 per unit of volatility. If you would invest 542.00 in Prospect Capital on January 19, 2024 and sell it today you would earn a total of 0.00 from holding Prospect Capital or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield Asset Management vs. Prospect Capital
Performance |
| Timeline |
| Brookfield Asset Man |
| Prospect Capital |
Brookfield Asset and Prospect Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Asset and Prospect Capital
The main advantage of trading using opposite Brookfield Asset and Prospect Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Asset position performs unexpectedly, Prospect Capital 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 Prospect Capital will offset losses from the drop in Prospect Capital's long position.The idea behind Brookfield Asset Management and Prospect Capital 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.| Prospect Capital vs. KKR Co LP | Prospect Capital vs. Patria Investments | Prospect Capital vs. Brookfield Asset Management |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |