Correlation Between Companhia Energetica and Brookfield Infrastructure

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

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

Diversification Opportunities for Companhia Energetica and Brookfield Infrastructure

-0.55

Correlation Coefficient

Companhia Energetica  Brookfield Infrastructure

Excellent diversification

The 3 months correlation between Companhia and Brookfield is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Energetica de and Brookfield Infrastructure Part in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Infrastructure and Companhia Energetica 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 Companhia Energetica de are associated (or correlated) with Brookfield Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Infrastructure has no effect on the direction of Companhia Energetica i.e., Companhia Energetica and Brookfield Infrastructure go up and down completely randomly.

Pair Corralation between Companhia Energetica and Brookfield Infrastructure

Considering the 90-day investment horizon Companhia Energetica is expected to generate 2.96 times less return on investment than Brookfield Infrastructure. In addition to that, Companhia Energetica is 1.18 times more volatile than Brookfield Infrastructure Partners. It trades about 0.03 of its total potential returns per unit of risk. Brookfield Infrastructure Partners is currently generating about 0.09 per unit of volatility. If you would invest  3,215  in Brookfield Infrastructure Partners on August 30, 2024 and sell it today you would earn a total of  268.00  from holding Brookfield Infrastructure Partners or generate 8.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Companhia Energetica de  vs.  Brookfield Infrastructure Part

Companhia Energetica

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Companhia Energetica de are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, Companhia Energetica is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Brookfield Infrastructure

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Infrastructure Partners are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady forward indicators, Brookfield Infrastructure may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Companhia Energetica and Brookfield Infrastructure

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

The idea behind Companhia Energetica de and Brookfield Infrastructure Partners 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.