Correlation Between Companhia Paranaense and Brookfield Infrastructure
Can any of the company-specific risk be diversified away by investing in both Companhia Paranaense 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 Companhia Paranaense and Brookfield Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Companhia Paranaense de and Brookfield Infrastructure Partners, you can compare the effects of market volatilities on Companhia Paranaense 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 Companhia Paranaense with a short position of Brookfield Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Paranaense and Brookfield Infrastructure.
Diversification Opportunities for Companhia Paranaense and Brookfield Infrastructure
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Companhia and Brookfield is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Paranaense de and Brookfield Infrastructure Part in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Infrastructure and Companhia Paranaense 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 Companhia Paranaense de 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 Companhia Paranaense i.e., Companhia Paranaense and Brookfield Infrastructure go up and down completely randomly.
Pair Corralation between Companhia Paranaense and Brookfield Infrastructure
Considering the 90-day investment horizon Companhia Paranaense de is expected to generate 1.97 times more return on investment than Brookfield Infrastructure. However, Companhia Paranaense is 1.97 times more volatile than Brookfield Infrastructure Partners. It trades about 0.35 of its potential returns per unit of risk. Brookfield Infrastructure Partners is currently generating about 0.13 per unit of risk. If you would invest 591.00 in Companhia Paranaense de on November 2, 2024 and sell it today you would earn a total of 81.00 from holding Companhia Paranaense de or generate 13.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia Paranaense de vs. Brookfield Infrastructure Part
Performance |
| Timeline |
| Companhia Paranaense |
| Brookfield Infrastructure |
Companhia Paranaense and Brookfield Infrastructure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Paranaense and Brookfield Infrastructure
The main advantage of trading using opposite Companhia Paranaense and Brookfield Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Paranaense 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.| Companhia Paranaense vs. Montauk Renewables | Companhia Paranaense vs. Energy of Minas | Companhia Paranaense vs. NorthWestern | Companhia Paranaense vs. Otter Tail |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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