Correlation Between Dow Jones and Brookfield Infrastructure
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Brookfield Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Brookfield Infrastructure Partners, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Brookfield Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Brookfield Infrastructure.
Diversification Opportunities for Dow Jones and Brookfield Infrastructure
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dow and Brookfield is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Brookfield Infrastructure Part in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Infrastructure and Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and Brookfield Infrastructure go up and down completely randomly.
Pair Corralation between Dow Jones and Brookfield Infrastructure
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.5 times less return on investment than Brookfield Infrastructure. But when comparing it to its historical volatility, Dow Jones Industrial is 2.29 times less risky than Brookfield Infrastructure. It trades about 0.08 of its potential returns per unit of risk. Brookfield Infrastructure Partners is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,325 in Brookfield Infrastructure Partners on September 2, 2024 and sell it today you would earn a total of 594.00 from holding Brookfield Infrastructure Partners or generate 44.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Brookfield Infrastructure Part
Performance |
| Timeline |
Dow Jones and Brookfield Infrastructure Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Brookfield Infrastructure Partners
Pair trading matchups for Brookfield Infrastructure
Pair Trading with Dow Jones and Brookfield Infrastructure
The main advantage of trading using opposite Dow Jones and Brookfield Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
| Brookfield Infrastructure vs. Brookfield Renewable Partners | Brookfield Infrastructure vs. Duke Energy | Brookfield Infrastructure vs. Brookfield Property Partners | Brookfield Infrastructure vs. CMS Energy |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |