Correlation Between Brookfield Infrastructure and Firm Capital
Can any of the company-specific risk be diversified away by investing in both Brookfield Infrastructure and Firm Capital 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 Firm Capital 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 Firm Capital Property, you can compare the effects of market volatilities on Brookfield Infrastructure and Firm Capital 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 Firm Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Infrastructure and Firm Capital.
Diversification Opportunities for Brookfield Infrastructure and Firm Capital
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Brookfield and Firm is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Infrastructure Part and Firm Capital Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firm Capital Property 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 Firm Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firm Capital Property has no effect on the direction of Brookfield Infrastructure i.e., Brookfield Infrastructure and Firm Capital go up and down completely randomly.
Pair Corralation between Brookfield Infrastructure and Firm Capital
Considering the 90-day investment horizon Brookfield Infrastructure Partners is expected to under-perform the Firm Capital. In addition to that, Brookfield Infrastructure is 1.25 times more volatile than Firm Capital Property. It trades about -0.06 of its total potential returns per unit of risk. Firm Capital Property is currently generating about -0.03 per unit of volatility. If you would invest 431.00 in Firm Capital Property on August 28, 2024 and sell it today you would lose (3.00) from holding Firm Capital Property or give up 0.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Brookfield Infrastructure Part vs. Firm Capital Property
Performance |
| Timeline |
| Brookfield Infrastructure |
| Firm Capital Property |
Brookfield Infrastructure and Firm Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Infrastructure and Firm Capital
The main advantage of trading using opposite Brookfield Infrastructure and Firm Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Infrastructure position performs unexpectedly, Firm Capital 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 Firm Capital will offset losses from the drop in Firm Capital's long position.| Brookfield Infrastructure vs. Allete Inc | Brookfield Infrastructure vs. Avista | Brookfield Infrastructure vs. NorthWestern | Brookfield Infrastructure vs. The AES |
| Firm Capital vs. Global Net Lease, | Firm Capital vs. VICI Properties | Firm Capital vs. Highlands REIT | Firm Capital vs. W P Carey |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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