Correlation Between Brookfield Infrastructure and Companhia Paranaense
Can any of the company-specific risk be diversified away by investing in both Brookfield Infrastructure and Companhia Paranaense 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 Companhia Paranaense 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 Companhia Paranaense de, you can compare the effects of market volatilities on Brookfield Infrastructure and Companhia Paranaense 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 Companhia Paranaense. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Infrastructure and Companhia Paranaense.
Diversification Opportunities for Brookfield Infrastructure and Companhia Paranaense
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brookfield and Companhia is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Infrastructure Part and Companhia Paranaense de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Paranaense 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 Companhia Paranaense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Paranaense has no effect on the direction of Brookfield Infrastructure i.e., Brookfield Infrastructure and Companhia Paranaense go up and down completely randomly.
Pair Corralation between Brookfield Infrastructure and Companhia Paranaense
Considering the 90-day investment horizon Brookfield Infrastructure is expected to generate 4.14 times less return on investment than Companhia Paranaense. But when comparing it to its historical volatility, Brookfield Infrastructure Partners is 1.16 times less risky than Companhia Paranaense. It trades about 0.05 of its potential returns per unit of risk. Companhia Paranaense de is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 522.00 in Companhia Paranaense de on October 23, 2024 and sell it today you would earn a total of 30.40 from holding Companhia Paranaense de or generate 5.82% 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. Companhia Paranaense de
Performance |
| Timeline |
| Brookfield Infrastructure |
| Companhia Paranaense |
Brookfield Infrastructure and Companhia Paranaense Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Infrastructure and Companhia Paranaense
The main advantage of trading using opposite Brookfield Infrastructure and Companhia Paranaense positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Infrastructure position performs unexpectedly, Companhia Paranaense 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 Companhia Paranaense will offset losses from the drop in Companhia Paranaense's long position.| Brookfield Infrastructure vs. Allete Inc | Brookfield Infrastructure vs. Avista | Brookfield Infrastructure vs. NorthWestern | Brookfield Infrastructure vs. The AES |
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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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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