Correlation Between 3i Group and Brookfield Asset
Can any of the company-specific risk be diversified away by investing in both 3i Group and Brookfield Asset 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 3i Group and Brookfield Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3i Group plc and Brookfield Asset Management, you can compare the effects of market volatilities on 3i Group and Brookfield Asset 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 3i Group with a short position of Brookfield Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3i Group and Brookfield Asset.
Diversification Opportunities for 3i Group and Brookfield Asset
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TGOPF and Brookfield is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding 3i Group plc and Brookfield Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Asset Man and 3i Group 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 3i Group plc are associated (or correlated) with Brookfield Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Asset Man has no effect on the direction of 3i Group i.e., 3i Group and Brookfield Asset go up and down completely randomly.
Pair Corralation between 3i Group and Brookfield Asset
Assuming the 90 days horizon 3i Group plc is expected to generate 1.18 times more return on investment than Brookfield Asset. However, 3i Group is 1.18 times more volatile than Brookfield Asset Management. It trades about 0.11 of its potential returns per unit of risk. Brookfield Asset Management is currently generating about 0.08 per unit of risk. If you would invest 2,267 in 3i Group plc on January 19, 2024 and sell it today you would earn a total of 1,213 from holding 3i Group plc or generate 53.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
3i Group plc vs. Brookfield Asset Management
Performance |
| Timeline |
| 3i Group plc |
| Brookfield Asset Man |
3i Group and Brookfield Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3i Group and Brookfield Asset
The main advantage of trading using opposite 3i Group and Brookfield Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3i Group position performs unexpectedly, Brookfield Asset 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 Asset will offset losses from the drop in Brookfield Asset's long position.The idea behind 3i Group plc and Brookfield Asset Management 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.| Brookfield Asset vs. KKR Co LP | Brookfield Asset vs. Blackstone Group | Brookfield Asset vs. Apollo Global Management | Brookfield Asset vs. T Rowe Price |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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