Correlation Between Enlight Renewable and Brookfield Infrastructure

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

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

Diversification Opportunities for Enlight Renewable and Brookfield Infrastructure

-0.35

Correlation Coefficient

Enlight Renewable  Brookfield Infrastructure

Very good diversification

The 3 months correlation between Enlight and Brookfield is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Enlight Renewable Energy and Brookfield Infrastructure Part in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Infrastructure and Enlight Renewable 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 Enlight Renewable Energy 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 Enlight Renewable i.e., Enlight Renewable and Brookfield Infrastructure go up and down completely randomly.

Pair Corralation between Enlight Renewable and Brookfield Infrastructure

Given the investment horizon of 90 days Enlight Renewable Energy is expected to generate 2.34 times more return on investment than Brookfield Infrastructure. However, Enlight Renewable is 2.34 times more volatile than Brookfield Infrastructure Partners. It trades about 0.02 of its potential returns per unit of risk. Brookfield Infrastructure Partners is currently generating about 0.02 per unit of risk. If you would invest  1,602  in Enlight Renewable Energy on August 31, 2024 and sell it today you would earn a total of  8.00  from holding Enlight Renewable Energy or generate 0.5% return on investment over 90 days.

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

Enlight Renewable Energy  vs.  Brookfield Infrastructure Part

Enlight Renewable Energy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Enlight Renewable Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Enlight Renewable is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Brookfield Infrastructure

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Enlight Renewable and Brookfield Infrastructure

The main advantage of trading using opposite Enlight Renewable and Brookfield Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enlight Renewable 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 Enlight Renewable Energy 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.