Correlation Between First National and Brookfield Infrastructure
Can any of the company-specific risk be diversified away by investing in both First National 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 First National and Brookfield Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First National Financial and Brookfield Infrastructure Partners, you can compare the effects of market volatilities on First National 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 First National with a short position of Brookfield Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of First National and Brookfield Infrastructure.
Diversification Opportunities for First National and Brookfield Infrastructure
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Brookfield is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding First National Financial and Brookfield Infrastructure Part in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Infrastructure and First National 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 First National Financial 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 First National i.e., First National and Brookfield Infrastructure go up and down completely randomly.
Pair Corralation between First National and Brookfield Infrastructure
Assuming the 90 days trading horizon First National Financial is expected to generate 1.09 times more return on investment than Brookfield Infrastructure. However, First National is 1.09 times more volatile than Brookfield Infrastructure Partners. It trades about 0.1 of its potential returns per unit of risk. Brookfield Infrastructure Partners is currently generating about 0.09 per unit of risk. If you would invest 1,140 in First National Financial on September 12, 2024 and sell it today you would earn a total of 404.00 from holding First National Financial or generate 35.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First National Financial vs. Brookfield Infrastructure Part
Performance |
| Timeline |
| First National Financial |
| Brookfield Infrastructure |
First National and Brookfield Infrastructure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First National and Brookfield Infrastructure
The main advantage of trading using opposite First National and Brookfield Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First National 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.| First National vs. Brookfield Infrastructure Partners | First National vs. Brookfield Infrastructure Partners | First National vs. iShares Canadian HYBrid | First National vs. Solar Alliance Energy |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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