Correlation Between Chesapeake Utilities and Brookfield Infrastructure
Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities and Brookfield Infrastructure 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 Chesapeake Utilities and Brookfield Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Utilities and Brookfield Infrastructure Corp, you can compare the effects of market volatilities on Chesapeake Utilities and Brookfield Infrastructure 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 Chesapeake Utilities with a short position of Brookfield Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and Brookfield Infrastructure.
Diversification Opportunities for Chesapeake Utilities and Brookfield Infrastructure
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chesapeake and Brookfield is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and Brookfield Infrastructure Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Infrastructure and Chesapeake Utilities 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 Chesapeake Utilities are associated (or correlated) with Brookfield Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Infrastructure has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and Brookfield Infrastructure go up and down completely randomly.
Pair Corralation between Chesapeake Utilities and Brookfield Infrastructure
Considering the 90-day investment horizon Chesapeake Utilities is expected to generate 1.25 times less return on investment than Brookfield Infrastructure. But when comparing it to its historical volatility, Chesapeake Utilities is 1.26 times less risky than Brookfield Infrastructure. It trades about 0.13 of its potential returns per unit of risk. Brookfield Infrastructure Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,458 in Brookfield Infrastructure Corp on August 24, 2024 and sell it today you would earn a total of 963.00 from holding Brookfield Infrastructure Corp or generate 27.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Chesapeake Utilities vs. Brookfield Infrastructure Corp
Performance |
| Timeline |
| Chesapeake Utilities |
| Brookfield Infrastructure |
Chesapeake Utilities and Brookfield Infrastructure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Utilities and Brookfield Infrastructure
The main advantage of trading using opposite Chesapeake Utilities and Brookfield Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Utilities position performs unexpectedly, Brookfield Infrastructure 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 Brookfield Infrastructure will offset losses from the drop in Brookfield Infrastructure's long position.| Chesapeake Utilities vs. Northwest Natural Gas | Chesapeake Utilities vs. One Gas | Chesapeake Utilities vs. NewJersey Resources | Chesapeake Utilities vs. Spire Inc |
| Brookfield Infrastructure vs. NewJersey Resources | Brookfield Infrastructure vs. Atmos Energy | Brookfield Infrastructure vs. UGI Corporation | Brookfield Infrastructure vs. Chesapeake Utilities |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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