Correlation Between Brookfield and ATS P

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

By analyzing existing cross correlation between Brookfield and ATS P, you can compare the effects of market volatilities on Brookfield and ATS P 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 with a short position of ATS P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield and ATS P.

Diversification Opportunities for Brookfield and ATS P

0.77

Correlation Coefficient

Brookfield  ATS P

Poor diversification

The 3 months correlation between Brookfield and ATS is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield and ATS P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATS P and Brookfield 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 are associated (or correlated) with ATS P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATS P has no effect on the direction of Brookfield i.e., Brookfield and ATS P go up and down completely randomly.

Pair Corralation between Brookfield and ATS P

Assuming the 90 days horizon Brookfield is expected to generate 0.52 times more return on investment than ATS P. However, Brookfield is 1.94 times less risky than ATS P. It trades about 0.32 of its potential returns per unit of risk. ATS P is currently generating about 0.15 per unit of risk. If you would invest  6,632  in Brookfield on April 20, 2025 and sell it today you would earn a total of  2,599  from holding Brookfield or generate 39.19% return on investment over 90 days.

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

Brookfield  vs.  ATS P

Brookfield

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Brookfield displayed solid returns over the last few months and may actually be approaching a breakup point.

ATS P

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATS P are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, ATS P displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brookfield and ATS P

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

The idea behind Brookfield and ATS P 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.