Correlation Between Colas SA and Brookfield Reinsurance

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

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

Diversification Opportunities for Colas SA and Brookfield Reinsurance

0.43

Correlation Coefficient

Colas SA  Brookfield Reinsurance

Very weak diversification

The 3 months correlation between Colas and Brookfield is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Colas SA and Brookfield Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Reinsurance and Colas SA 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 Colas SA are associated (or correlated) with Brookfield Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Reinsurance has no effect on the direction of Colas SA i.e., Colas SA and Brookfield Reinsurance go up and down completely randomly.

Pair Corralation between Colas SA and Brookfield Reinsurance

If you would invest  4,059  in Brookfield Reinsurance on February 8, 2024 and sell it today you would earn a total of  347.00  from holding Brookfield Reinsurance or generate 8.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.55%
Values	Daily Returns

Colas SA  vs.  Brookfield Reinsurance

Colas SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Colas SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Colas SA is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Brookfield Reinsurance

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Reinsurance are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Brookfield Reinsurance may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Colas SA and Brookfield Reinsurance

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

The idea behind Colas SA and Brookfield Reinsurance 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..