Correlation Between Duke Energy and Brookfield Infrastructure
Can any of the company-specific risk be diversified away by investing in both Duke Energy 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 Duke Energy and Brookfield Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Duke Energy and Brookfield Infrastructure Partners, you can compare the effects of market volatilities on Duke Energy 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 Duke Energy with a short position of Brookfield Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duke Energy and Brookfield Infrastructure.
Diversification Opportunities for Duke Energy and Brookfield Infrastructure
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Duke and Brookfield is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Duke Energy and Brookfield Infrastructure Part in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Infrastructure and Duke Energy 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 Duke Energy 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 Duke Energy i.e., Duke Energy and Brookfield Infrastructure go up and down completely randomly.
Pair Corralation between Duke Energy and Brookfield Infrastructure
Assuming the 90 days trading horizon Duke Energy is expected to generate 0.27 times more return on investment than Brookfield Infrastructure. However, Duke Energy is 3.68 times less risky than Brookfield Infrastructure. It trades about 0.09 of its potential returns per unit of risk. Brookfield Infrastructure Partners is currently generating about -0.16 per unit of risk. If you would invest 2,485 in Duke Energy on August 27, 2024 and sell it today you would earn a total of 18.00 from holding Duke Energy or generate 0.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Duke Energy vs. Brookfield Infrastructure Part
Performance |
| Timeline |
| Duke Energy |
| Brookfield Infrastructure |
Duke Energy and Brookfield Infrastructure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Duke Energy and Brookfield Infrastructure
The main advantage of trading using opposite Duke Energy and Brookfield Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Duke Energy 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.| Duke Energy vs. Centrais Eltricas Brasileiras | Duke Energy vs. Nextera Energy | Duke Energy vs. Consumers Energy | Duke Energy 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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