Correlation Between Brookfield Business and Steel Partners

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

Diversification Opportunities for Brookfield Business and Steel Partners

0.09
  Correlation Coefficient

Significant diversification

The 3 months correlation between Brookfield and Steel is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Partners and Steel Partners Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Partners Holdings 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 Steel Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Partners Holdings has no effect on the direction of Brookfield Business i.e., Brookfield Business and Steel Partners go up and down completely randomly.

Pair Corralation between Brookfield Business and Steel Partners

Considering the 90-day investment horizon Brookfield Business Partners is expected to generate 5.75 times more return on investment than Steel Partners. However, Brookfield Business is 5.75 times more volatile than Steel Partners Holdings. It trades about 0.03 of its potential returns per unit of risk. Steel Partners Holdings is currently generating about 0.13 per unit of risk. If you would invest  1,951  in Brookfield Business Partners on April 24, 2024 and sell it today you would earn a total of  47.00  from holding Brookfield Business Partners or generate 2.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Brookfield Business Partners  vs.  Steel Partners Holdings

 Performance 
       Timeline  
Brookfield Business 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Business Partners are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, Brookfield Business is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
Steel Partners Holdings 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Steel Partners Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Steel Partners is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Brookfield Business and Steel Partners Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Brookfield Business and Steel Partners

The main advantage of trading using opposite Brookfield Business and Steel Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Business position performs unexpectedly, Steel Partners 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 Steel Partners will offset losses from the drop in Steel Partners' long position.
The idea behind Brookfield Business Partners and Steel Partners Holdings 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.
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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