Correlation Between FTAI Infrastructure and Brookfield Business

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

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

Diversification Opportunities for FTAI Infrastructure and Brookfield Business

-0.44

Correlation Coefficient

FTAI Infrastructure  Brookfield Business

Very good diversification

The 3 months correlation between FTAI and Brookfield is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding FTAI Infrastructure and Brookfield Business Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Business and FTAI 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 FTAI Infrastructure are associated (or correlated) with Brookfield Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Business has no effect on the direction of FTAI Infrastructure i.e., FTAI Infrastructure and Brookfield Business go up and down completely randomly.

Pair Corralation between FTAI Infrastructure and Brookfield Business

Considering the 90-day investment horizon FTAI Infrastructure is expected to under-perform the Brookfield Business. In addition to that, FTAI Infrastructure is 1.65 times more volatile than Brookfield Business Partners. It trades about -0.16 of its total potential returns per unit of risk. Brookfield Business Partners is currently generating about 0.07 per unit of volatility. If you would invest  2,207  in Brookfield Business Partners on December 29, 2024 and sell it today you would earn a total of  175.00  from holding Brookfield Business Partners or generate 7.93% return on investment over 90 days.

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

FTAI Infrastructure  vs.  Brookfield Business Partners

FTAI Infrastructure

Risk-Adjusted Performance

Very Weak

Over the last 90 days FTAI Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Brookfield Business

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Business Partners are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, Brookfield Business may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with FTAI Infrastructure and Brookfield Business

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

The idea behind FTAI Infrastructure and Brookfield Business 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.