Correlation Between Brookfield Asset and Eagle Point

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Can any of the company-specific risk be diversified away by investing in both Brookfield Asset and Eagle Point 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 Eagle Point 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 Eagle Point Credit, you can compare the effects of market volatilities on Brookfield Asset and Eagle Point 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 Eagle Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Asset and Eagle Point.

Diversification Opportunities for Brookfield Asset and Eagle Point

0.04
  Correlation Coefficient

Significant diversification

The 3 months correlation between Brookfield and Eagle is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Asset Management and Eagle Point Credit in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Eagle Point Credit 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 Eagle Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Point Credit has no effect on the direction of Brookfield Asset i.e., Brookfield Asset and Eagle Point go up and down completely randomly.

Pair Corralation between Brookfield Asset and Eagle Point

Considering the 90-day investment horizon Brookfield Asset Management is expected to generate 3.84 times more return on investment than Eagle Point. However, Brookfield Asset is 3.84 times more volatile than Eagle Point Credit. It trades about 0.05 of its potential returns per unit of risk. Eagle Point Credit is currently generating about 0.09 per unit of risk. If you would invest  3,121  in Brookfield Asset Management on February 16, 2022 and sell it today you would earn a total of  1,657  from holding Brookfield Asset Management or generate 53.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy89.16%
ValuesDaily Returns

Brookfield Asset Management  vs.  Eagle Point Credit

 Performance (%) 
      Timeline 
Brookfield Asset Man 
Brookfield Performance
0 of 100
Over the last 90 days Brookfield Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's basic indicators remain relatively steady which may send shares a bit higher in June 2022. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Brookfield Price Channel

Eagle Point Credit 
Eagle Performance
0 of 100
Over the last 90 days Eagle Point Credit has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Eagle Point is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Brookfield Asset and Eagle Point Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Brookfield Asset and Eagle Point

The main advantage of trading using opposite Brookfield Asset and Eagle Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Asset position performs unexpectedly, Eagle Point 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 Eagle Point will offset losses from the drop in Eagle Point's long position.
The idea behind Brookfield Asset Management and Eagle Point Credit 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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