Correlation Between Brookfield Infrastructure and Brookfield

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

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

Diversification Opportunities for Brookfield Infrastructure and Brookfield

0.7

Correlation Coefficient

Brookfield Infrastructure  Brookfield

Poor diversification

The 3 months correlation between Brookfield and Brookfield is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Infrastructure Corp and Brookfield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield and Brookfield Infrastructure 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 Infrastructure Corp are associated (or correlated) with Brookfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield has no effect on the direction of Brookfield Infrastructure i.e., Brookfield Infrastructure and Brookfield go up and down completely randomly.

Pair Corralation between Brookfield Infrastructure and Brookfield

Assuming the 90 days trading horizon Brookfield Infrastructure Corp is expected to under-perform the Brookfield. In addition to that, Brookfield Infrastructure is 1.08 times more volatile than Brookfield. It trades about -0.06 of its total potential returns per unit of risk. Brookfield is currently generating about -0.02 per unit of volatility. If you would invest  8,635  in Brookfield on December 1, 2024 and sell it today you would lose (263.00) from holding Brookfield or give up 3.05% of portfolio value over 90 days.

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

Brookfield Infrastructure Corp  vs.  Brookfield

Brookfield Infrastructure

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brookfield Infrastructure Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Brookfield

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brookfield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Brookfield is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Brookfield Infrastructure and Brookfield

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

The idea behind Brookfield Infrastructure Corp and Brookfield 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.

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 the Content Syndication module to quickly integrate customizable finance content to your own investment portal.