Correlation Between Brookfield Business and Chain Bridge

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

By analyzing existing cross correlation between Brookfield Business Corp and Chain Bridge I, you can compare the effects of market volatilities on Brookfield Business and Chain Bridge 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 Chain Bridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Business and Chain Bridge.

Diversification Opportunities for Brookfield Business and Chain Bridge

-0.32

Correlation Coefficient

Brookfield Business  Chain Bridge

Very good diversification

The 3 months correlation between Brookfield and Chain is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Corp and Chain Bridge I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chain Bridge I 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 Corp are associated (or correlated) with Chain Bridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chain Bridge I has no effect on the direction of Brookfield Business i.e., Brookfield Business and Chain Bridge go up and down completely randomly.

Pair Corralation between Brookfield Business and Chain Bridge

Given the investment horizon of 90 days Brookfield Business Corp is expected to under-perform the Chain Bridge. In addition to that, Brookfield Business is 3.28 times more volatile than Chain Bridge I. It trades about -0.08 of its total potential returns per unit of risk. Chain Bridge I is currently generating about 0.06 per unit of volatility. If you would invest  1,101  in Chain Bridge I on February 18, 2024 and sell it today you would earn a total of  23.00  from holding Chain Bridge I or generate 2.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Brookfield Business Corp  vs.  Chain Bridge I

Brookfield Business Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brookfield Business Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Chain Bridge I

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chain Bridge I are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Chain Bridge is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Brookfield Business and Chain Bridge

The main advantage of trading using opposite Brookfield Business and Chain Bridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Business position performs unexpectedly, Chain Bridge 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 Chain Bridge will offset losses from the drop in Chain Bridge's long position.

The idea behind Brookfield Business Corp and Chain Bridge I 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.