Correlation Between Dorel Industries and Brookfield Infrastructure
Can any of the company-specific risk be diversified away by investing in both Dorel Industries 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 Dorel Industries and Brookfield Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dorel Industries and Brookfield Infrastructure Corp, you can compare the effects of market volatilities on Dorel Industries 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 Dorel Industries with a short position of Brookfield Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dorel Industries and Brookfield Infrastructure.
Diversification Opportunities for Dorel Industries and Brookfield Infrastructure
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dorel and Brookfield is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Dorel Industries and Brookfield Infrastructure Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Infrastructure and Dorel Industries 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 Dorel Industries 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 Dorel Industries i.e., Dorel Industries and Brookfield Infrastructure go up and down completely randomly.
Pair Corralation between Dorel Industries and Brookfield Infrastructure
Assuming the 90 days trading horizon Dorel Industries is expected to under-perform the Brookfield Infrastructure. In addition to that, Dorel Industries is 1.66 times more volatile than Brookfield Infrastructure Corp. It trades about -0.04 of its total potential returns per unit of risk. Brookfield Infrastructure Corp is currently generating about 0.08 per unit of volatility. If you would invest 4,543 in Brookfield Infrastructure Corp on September 12, 2024 and sell it today you would earn a total of 1,490 from holding Brookfield Infrastructure Corp or generate 32.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dorel Industries vs. Brookfield Infrastructure Corp
Performance |
| Timeline |
| Dorel Industries |
| Brookfield Infrastructure |
Dorel Industries and Brookfield Infrastructure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dorel Industries and Brookfield Infrastructure
The main advantage of trading using opposite Dorel Industries and Brookfield Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dorel Industries 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.| Dorel Industries vs. Transcontinental | Dorel Industries vs. Gildan Activewear | Dorel Industries vs. Cogeco Communications | Dorel Industries vs. High Liner Foods |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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