Correlation Between Eversource Energy and Brookfield Infrastructure
Can any of the company-specific risk be diversified away by investing in both Eversource 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 Eversource 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 Eversource Energy and Brookfield Infrastructure Corp, you can compare the effects of market volatilities on Eversource 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 Eversource Energy with a short position of Brookfield Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eversource Energy and Brookfield Infrastructure.
Diversification Opportunities for Eversource Energy and Brookfield Infrastructure
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eversource and Brookfield is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Eversource Energy and Brookfield Infrastructure Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Infrastructure and Eversource 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 Eversource 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 Eversource Energy i.e., Eversource Energy and Brookfield Infrastructure go up and down completely randomly.
Pair Corralation between Eversource Energy and Brookfield Infrastructure
Allowing for the 90-day total investment horizon Eversource Energy is expected to generate 2.88 times less return on investment than Brookfield Infrastructure. But when comparing it to its historical volatility, Eversource Energy is 1.28 times less risky than Brookfield Infrastructure. It trades about 0.06 of its potential returns per unit of risk. Brookfield Infrastructure Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,385 in Brookfield Infrastructure Corp on August 30, 2024 and sell it today you would earn a total of 1,050 from holding Brookfield Infrastructure Corp or generate 31.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eversource Energy vs. Brookfield Infrastructure Corp
Performance |
| Timeline |
| Eversource Energy |
| Brookfield Infrastructure |
Eversource Energy and Brookfield Infrastructure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eversource Energy and Brookfield Infrastructure
The main advantage of trading using opposite Eversource Energy and Brookfield Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eversource 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.| Eversource Energy vs. CenterPoint Energy | Eversource Energy vs. FirstEnergy | Eversource Energy vs. Pinnacle West Capital | Eversource Energy vs. Edison International |
| Brookfield Infrastructure vs. NewJersey Resources | Brookfield Infrastructure vs. Northwest Natural Gas | Brookfield Infrastructure vs. NorthWestern | 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |