Correlation Between Brookfield Business and OPC Energy
Can any of the company-specific risk be diversified away by investing in both Brookfield Business and OPC Energy 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 OPC Energy 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 OPC Energy, you can compare the effects of market volatilities on Brookfield Business and OPC Energy 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 OPC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Business and OPC Energy.
Diversification Opportunities for Brookfield Business and OPC Energy
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Brookfield and OPC is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Partners and OPC Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPC Energy 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 OPC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPC Energy has no effect on the direction of Brookfield Business i.e., Brookfield Business and OPC Energy go up and down completely randomly.
Pair Corralation between Brookfield Business and OPC Energy
Considering the 90-day investment horizon Brookfield Business Partners is expected to under-perform the OPC Energy. But the stock apears to be less risky and, when comparing its historical volatility, Brookfield Business Partners is 1.8 times less risky than OPC Energy. The stock trades about -0.27 of its potential returns per unit of risk. The OPC Energy is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 265,000 in OPC Energy on January 26, 2024 and sell it today you would earn a total of 20,000 from holding OPC Energy or generate 7.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.19% |
| Values | Daily Returns |
Brookfield Business Partners vs. OPC Energy
Performance |
| Timeline |
| Brookfield Business |
| OPC Energy |
Brookfield Business and OPC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Business and OPC Energy
The main advantage of trading using opposite Brookfield Business and OPC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Business position performs unexpectedly, OPC Energy 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 OPC Energy will offset losses from the drop in OPC Energy's long position.| Brookfield Business vs. Steel Partners Holdings | Brookfield Business vs. Compass Diversified | Brookfield Business vs. Matthews International | Brookfield Business vs. Tejon Ranch Co |
| OPC Energy vs. Energix Renewable Energies | OPC Energy vs. Doral Group Renewable | OPC Energy vs. Elbit Systems | OPC Energy vs. Electreon Wireless |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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