Correlation Between Brookfield Infrastructure and Black Hills
Can any of the company-specific risk be diversified away by investing in both Brookfield Infrastructure and Black Hills 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 Black Hills 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 Black Hills, you can compare the effects of market volatilities on Brookfield Infrastructure and Black Hills 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 Black Hills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Infrastructure and Black Hills.
Diversification Opportunities for Brookfield Infrastructure and Black Hills
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Brookfield and Black is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Infrastructure Part and Black Hills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hills 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 Black Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hills has no effect on the direction of Brookfield Infrastructure i.e., Brookfield Infrastructure and Black Hills go up and down completely randomly.
Pair Corralation between Brookfield Infrastructure and Black Hills
Considering the 90-day investment horizon Brookfield Infrastructure Partners is expected to under-perform the Black Hills. But the stock apears to be less risky and, when comparing its historical volatility, Brookfield Infrastructure Partners is 1.24 times less risky than Black Hills. The stock trades about -0.02 of its potential returns per unit of risk. The Black Hills is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 5,972 in Black Hills on August 27, 2024 and sell it today you would earn a total of 494.00 from holding Black Hills or generate 8.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield Infrastructure Part vs. Black Hills
Performance |
| Timeline |
| Brookfield Infrastructure |
| Black Hills |
Brookfield Infrastructure and Black Hills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Infrastructure and Black Hills
The main advantage of trading using opposite Brookfield Infrastructure and Black Hills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Infrastructure position performs unexpectedly, Black Hills 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 Black Hills will offset losses from the drop in Black Hills' long position.| Brookfield Infrastructure vs. Allete Inc | Brookfield Infrastructure vs. Avista | Brookfield Infrastructure vs. NorthWestern | Brookfield Infrastructure vs. The AES |
| Black Hills vs. NorthWestern | Black Hills vs. Avista | Black Hills vs. Otter Tail | Black Hills vs. Companhia Paranaense de |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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