Correlation Between Unity Software and Brookfield Infrastructure

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

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

Diversification Opportunities for Unity Software and Brookfield Infrastructure

-0.06

Correlation Coefficient

Unity Software  Brookfield Infrastructure

Good diversification

The 3 months correlation between Unity and Brookfield is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Unity Software and Brookfield Infrastructure Part in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Infrastructure and Unity Software 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 Unity Software 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 Unity Software i.e., Unity Software and Brookfield Infrastructure go up and down completely randomly.

Pair Corralation between Unity Software and Brookfield Infrastructure

Taking into account the 90-day investment horizon Unity Software is expected to generate 13.26 times more return on investment than Brookfield Infrastructure. However, Unity Software is 13.26 times more volatile than Brookfield Infrastructure Partners. It trades about 0.0 of its potential returns per unit of risk. Brookfield Infrastructure Partners is currently generating about -0.03 per unit of risk. If you would invest  2,251  in Unity Software on December 30, 2024 and sell it today you would lose (197.00) from holding Unity Software or give up 8.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Unity Software  vs.  Brookfield Infrastructure Part

Unity Software

Risk-Adjusted Performance

Very Weak

Over the last 90 days Unity Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Unity Software is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Brookfield Infrastructure

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brookfield Infrastructure Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Brookfield Infrastructure is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Unity Software and Brookfield Infrastructure

The main advantage of trading using opposite Unity Software and Brookfield Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unity Software 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 Unity Software 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.