Correlation Between Brookfield Infrastructure and Legend Power
Can any of the company-specific risk be diversified away by investing in both Brookfield Infrastructure and Legend Power 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 Legend Power 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 Legend Power Systems, you can compare the effects of market volatilities on Brookfield Infrastructure and Legend Power 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 Legend Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Infrastructure and Legend Power.
Diversification Opportunities for Brookfield Infrastructure and Legend Power
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Brookfield and Legend is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Infrastructure Part and Legend Power Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legend Power Systems 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 Legend Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legend Power Systems has no effect on the direction of Brookfield Infrastructure i.e., Brookfield Infrastructure and Legend Power go up and down completely randomly.
Pair Corralation between Brookfield Infrastructure and Legend Power
Assuming the 90 days trading horizon Brookfield Infrastructure Partners is expected to generate 0.11 times more return on investment than Legend Power. However, Brookfield Infrastructure Partners is 8.92 times less risky than Legend Power. It trades about 0.07 of its potential returns per unit of risk. Legend Power Systems is currently generating about -0.07 per unit of risk. If you would invest 2,455 in Brookfield Infrastructure Partners on September 3, 2024 and sell it today you would earn a total of 45.00 from holding Brookfield Infrastructure Partners or generate 1.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield Infrastructure Part vs. Legend Power Systems
Performance |
| Timeline |
| Brookfield Infrastructure |
| Legend Power Systems |
Brookfield Infrastructure and Legend Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Infrastructure and Legend Power
The main advantage of trading using opposite Brookfield Infrastructure and Legend Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Infrastructure position performs unexpectedly, Legend Power 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 Legend Power will offset losses from the drop in Legend Power's long position.| Brookfield Infrastructure vs. Endeavour Silver Corp | Brookfield Infrastructure vs. Capstone Mining Corp | Brookfield Infrastructure vs. Arizona Gold Silver | Brookfield Infrastructure vs. Dream Office Real |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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