Correlation Between Avista and Brookfield Infrastructure
Can any of the company-specific risk be diversified away by investing in both Avista 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 Avista and Brookfield Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avista and Brookfield Infrastructure Partners, you can compare the effects of market volatilities on Avista 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 Avista with a short position of Brookfield Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avista and Brookfield Infrastructure.
Diversification Opportunities for Avista and Brookfield Infrastructure
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Avista and Brookfield is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Avista and Brookfield Infrastructure Part in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Infrastructure and Avista 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 Avista 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 Avista i.e., Avista and Brookfield Infrastructure go up and down completely randomly.
Pair Corralation between Avista and Brookfield Infrastructure
Considering the 90-day investment horizon Avista is expected to generate 1.22 times more return on investment than Brookfield Infrastructure. However, Avista is 1.22 times more volatile than Brookfield Infrastructure Partners. It trades about 0.09 of its potential returns per unit of risk. Brookfield Infrastructure Partners is currently generating about -0.08 per unit of risk. If you would invest 3,819 in Avista on August 27, 2024 and sell it today you would earn a total of 94.00 from holding Avista or generate 2.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avista vs. Brookfield Infrastructure Part
Performance |
| Timeline |
| Avista |
| Brookfield Infrastructure |
Avista and Brookfield Infrastructure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avista and Brookfield Infrastructure
The main advantage of trading using opposite Avista and Brookfield Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avista 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.| Avista vs. Allete Inc | Avista vs. Black Hills | Avista vs. Montauk Renewables | Avista vs. Companhia Paranaense de |
| Brookfield Infrastructure vs. Allete Inc | Brookfield Infrastructure vs. Avista | Brookfield Infrastructure vs. NorthWestern | Brookfield Infrastructure vs. The AES |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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