Correlation Between Brookfield Asset and Brookfield Renewable

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

Diversification Opportunities for Brookfield Asset and Brookfield Renewable

0.49

Correlation Coefficient

Brookfield Asset  Brookfield Renewable

Very weak diversification

The 3 months correlation between Brookfield and Brookfield is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Asset Management and Brookfield Renewable Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Renewable Corp 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 Brookfield Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Renewable Corp has no effect on the direction of Brookfield Asset i.e., Brookfield Asset and Brookfield Renewable go up and down completely randomly.

Pair Corralation between Brookfield Asset and Brookfield Renewable

Assuming the 90 days trading horizon Brookfield Asset is expected to generate 1.58 times less return on investment than Brookfield Renewable. But when comparing it to its historical volatility, Brookfield Asset Management is 1.18 times less risky than Brookfield Renewable. It trades about 0.17 of its potential returns per unit of risk. Brookfield Renewable Corp is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  3,777  in Brookfield Renewable Corp on April 23, 2025 and sell it today you would earn a total of  1,157  from holding Brookfield Renewable Corp or generate 30.63% return on investment over 90 days.

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

Brookfield Asset Management  vs.  Brookfield Renewable Corp

Brookfield Asset Man

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Asset Management are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Brookfield Asset displayed solid returns over the last few months and may actually be approaching a breakup point.

Brookfield Renewable Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Renewable Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Brookfield Renewable displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brookfield Asset and Brookfield Renewable

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

The idea behind Brookfield Asset Management and Brookfield Renewable Corp 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.