Correlation Between Ford and Brookfield Infrastructure
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and Brookfield Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Brookfield Infrastructure Partners, you can compare the effects of market volatilities on Ford 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 Ford with a short position of Brookfield Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Brookfield Infrastructure.
Diversification Opportunities for Ford and Brookfield Infrastructure
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Brookfield is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Brookfield Infrastructure Part in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Infrastructure and Ford 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 Ford Motor 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 Ford i.e., Ford and Brookfield Infrastructure go up and down completely randomly.
Pair Corralation between Ford and Brookfield Infrastructure
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Brookfield Infrastructure. In addition to that, Ford is 2.23 times more volatile than Brookfield Infrastructure Partners. It trades about 0.0 of its total potential returns per unit of risk. Brookfield Infrastructure Partners is currently generating about 0.1 per unit of volatility. If you would invest 1,673 in Brookfield Infrastructure Partners on September 2, 2024 and sell it today you would earn a total of 246.00 from holding Brookfield Infrastructure Partners or generate 14.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Brookfield Infrastructure Part
Performance |
| Timeline |
| Ford Motor |
| Brookfield Infrastructure |
Ford and Brookfield Infrastructure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Brookfield Infrastructure
The main advantage of trading using opposite Ford and Brookfield Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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.The idea behind Ford Motor and Brookfield Infrastructure Partners pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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