Correlation Between Brookfield Infrastructure and Emera Srs
Can any of the company-specific risk be diversified away by investing in both Brookfield Infrastructure and Emera Srs 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 Brookfield Infrastructure and Emera Srs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookfield Infrastructure Partners and Emera Srs C, you can compare the effects of market volatilities on Brookfield Infrastructure and Emera Srs 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 Brookfield Infrastructure with a short position of Emera Srs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Infrastructure and Emera Srs.
Diversification Opportunities for Brookfield Infrastructure and Emera Srs
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brookfield and Emera is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Infrastructure Part and Emera Srs C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emera Srs C and Brookfield 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 Brookfield Infrastructure Partners are associated (or correlated) with Emera Srs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emera Srs C has no effect on the direction of Brookfield Infrastructure i.e., Brookfield Infrastructure and Emera Srs go up and down completely randomly.
Pair Corralation between Brookfield Infrastructure and Emera Srs
Assuming the 90 days trading horizon Brookfield Infrastructure is expected to generate 1.65 times less return on investment than Emera Srs. In addition to that, Brookfield Infrastructure is 1.05 times more volatile than Emera Srs C. It trades about 0.04 of its total potential returns per unit of risk. Emera Srs C is currently generating about 0.08 per unit of volatility. If you would invest 1,783 in Emera Srs C on October 25, 2024 and sell it today you would earn a total of 609.00 from holding Emera Srs C or generate 34.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield Infrastructure Part vs. Emera Srs C
Performance |
| Timeline |
| Brookfield Infrastructure |
| Emera Srs C |
Brookfield Infrastructure and Emera Srs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Infrastructure and Emera Srs
The main advantage of trading using opposite Brookfield Infrastructure and Emera Srs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Infrastructure position performs unexpectedly, Emera Srs 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 Emera Srs will offset losses from the drop in Emera Srs' long position.The idea behind Brookfield Infrastructure Partners and Emera Srs C 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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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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