Correlation Between Brookfield Asset and Bank of New York

By analyzing existing cross correlation between Brookfield Asset Management and Bank Of New, you can compare the effects of market volatilities on Brookfield Asset and Bank of New York 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 Bank of New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Asset and Bank of New York.

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

Diversification Opportunities for Brookfield Asset and Bank of New York

-0.06
  Correlation Coefficient
Brookfield Asset Man
Bank of New York

Good diversification

The 3 months correlation between Brookfield and Bank of New York is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Asset Management and Bank Of New in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Bank of New York 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 Bank of New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of New York has no effect on the direction of Brookfield Asset i.e., Brookfield Asset and Bank of New York go up and down completely randomly.

Pair Corralation between Brookfield Asset and Bank of New York

Considering the 90-day investment horizon Brookfield Asset Management is expected to generate 1.04 times more return on investment than Bank of New York. However, Brookfield Asset is 1.04 times more volatile than Bank Of New. It trades about 0.18 of its potential returns per unit of risk. Bank Of New is currently generating about 0.15 per unit of risk. If you would invest  5,105  in Brookfield Asset Management on May 5, 2021 and sell it today you would earn a total of  339.00  from holding Brookfield Asset Management or generate 6.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Brookfield Asset Management  vs.  Bank Of New

 Performance (%) 
      Timeline 
Brookfield Asset Man 
 Brookfield Performance
14 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Asset Management are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively sluggish basic indicators, Brookfield Asset revealed solid returns over the last few months and may actually be approaching a breakup point.

Brookfield Price Channel

Bank of New York 
 Bank of New York Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bank Of New are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward-looking signals, Bank of New York is not utilizing all of its potentials. The new stock price confusion, may contribute to short-horizon losses for the traders.

Bank of New York Price Channel

Brookfield Asset and Bank of New York Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Brookfield Asset and Bank of New York

The main advantage of trading using opposite Brookfield Asset and Bank of New York positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Asset position performs unexpectedly, Bank of New York 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 Bank of New York will offset losses from the drop in Bank of New York's long position.
The idea behind Brookfield Asset Management and Bank Of New 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.
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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