Correlation Between Brookfield Asset and Bank of New York

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

Diversification Opportunities for Brookfield Asset and Bank of New York

0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Brookfield and Bank of New York is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Asset Management and Bank Of New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of New York 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 Bank of New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of New York has no effect on the direction of Brookfield Asset i.e., Brookfield Asset and Bank of New York go up and down completely randomly.

Pair Corralation between Brookfield Asset and Bank of New York

Considering the 90-day investment horizon Brookfield Asset Management is expected to under-perform the Bank of New York. In addition to that, Brookfield Asset is 1.07 times more volatile than Bank Of New. It trades about -0.05 of its total potential returns per unit of risk. Bank Of New is currently generating about -0.05 per unit of volatility. If you would invest  5,191  in Bank Of New on July 4, 2022 and sell it today you would lose (1,339)  from holding Bank Of New or give up 25.79% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Brookfield Asset Management  vs.  Bank Of New

 Performance (%) 
       Timeline  
Brookfield Asset Man 
Brookfield Performance
0 of 100
Over the last 90 days Brookfield Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

Brookfield Price Channel

Bank of New York 
Bank of New York Performance
0 of 100
Over the last 90 days Bank Of New has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward-looking signals remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Bank of New York Price Channel

Brookfield Asset and Bank of New York Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Brookfield Asset and Bank of New York

The main advantage of trading using opposite Brookfield Asset and Bank of New York positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Asset position performs unexpectedly, Bank of New York 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 Bank of New York will offset losses from the drop in Bank of New York's long position.
Brookfield Asset vs. Boeing Company
The idea behind Brookfield Asset Management and Bank Of New 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.
Bank of New York vs. Boeing Company
Check out your portfolio center. 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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