Correlation Between Brookfield Infrastructure and Energy
Can any of the company-specific risk be diversified away by investing in both Brookfield Infrastructure and Energy 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 Energy 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 Energy and Water, you can compare the effects of market volatilities on Brookfield Infrastructure and Energy 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 Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Infrastructure and Energy.
Diversification Opportunities for Brookfield Infrastructure and Energy
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Brookfield and Energy is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Infrastructure Part and Energy and Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy and Water 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 Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy and Water has no effect on the direction of Brookfield Infrastructure i.e., Brookfield Infrastructure and Energy go up and down completely randomly.
Pair Corralation between Brookfield Infrastructure and Energy
Considering the 90-day investment horizon Brookfield Infrastructure Partners is expected to generate 0.15 times more return on investment than Energy. However, Brookfield Infrastructure Partners is 6.67 times less risky than Energy. It trades about 0.08 of its potential returns per unit of risk. Energy and Water is currently generating about -0.06 per unit of risk. If you would invest 2,515 in Brookfield Infrastructure Partners on August 26, 2024 and sell it today you would earn a total of 959.00 from holding Brookfield Infrastructure Partners or generate 38.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield Infrastructure Part vs. Energy and Water
Performance |
| Timeline |
| Brookfield Infrastructure |
| Energy and Water |
Brookfield Infrastructure and Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Infrastructure and Energy
The main advantage of trading using opposite Brookfield Infrastructure and Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Infrastructure position performs unexpectedly, Energy 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 Energy will offset losses from the drop in Energy's long position.| Brookfield Infrastructure vs. Allete Inc | Brookfield Infrastructure vs. Avista | Brookfield Infrastructure vs. NorthWestern | Brookfield Infrastructure vs. The AES |
| Energy vs. TOMI Environmental Solutions | Energy vs. Zurn Elkay Water | Energy vs. Federal Signal | Energy vs. Energy Recovery |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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