Correlation Between Brookfield Infrastructure and Manulife Financial
Can any of the company-specific risk be diversified away by investing in both Brookfield Infrastructure and Manulife Financial 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 Manulife Financial 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 Manulife Financial Corp, you can compare the effects of market volatilities on Brookfield Infrastructure and Manulife Financial 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 Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Infrastructure and Manulife Financial.
Diversification Opportunities for Brookfield Infrastructure and Manulife Financial
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Brookfield and Manulife is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Infrastructure Part and Manulife Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Financial Corp 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 Manulife Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Financial Corp has no effect on the direction of Brookfield Infrastructure i.e., Brookfield Infrastructure and Manulife Financial go up and down completely randomly.
Pair Corralation between Brookfield Infrastructure and Manulife Financial
Assuming the 90 days trading horizon Brookfield Infrastructure is expected to generate 1.22 times less return on investment than Manulife Financial. But when comparing it to its historical volatility, Brookfield Infrastructure Partners is 1.07 times less risky than Manulife Financial. It trades about 0.09 of its potential returns per unit of risk. Manulife Financial Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,558 in Manulife Financial Corp on September 12, 2024 and sell it today you would earn a total of 544.00 from holding Manulife Financial Corp or generate 34.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield Infrastructure Part vs. Manulife Financial Corp
Performance |
| Timeline |
| Brookfield Infrastructure |
| Manulife Financial Corp |
Brookfield Infrastructure and Manulife Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Infrastructure and Manulife Financial
The main advantage of trading using opposite Brookfield Infrastructure and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Infrastructure position performs unexpectedly, Manulife Financial 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 Manulife Financial will offset losses from the drop in Manulife Financial's long position.| Brookfield Infrastructure vs. Microsoft Corp CDR | Brookfield Infrastructure vs. Apple Inc CDR | Brookfield Infrastructure vs. Alphabet Inc CDR | Brookfield Infrastructure vs. Amazon CDR |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |