Correlation Between Great West and Brookfield Infrastructure
Can any of the company-specific risk be diversified away by investing in both Great West 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 Great West and Brookfield Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West Lifeco and Brookfield Infrastructure Partners, you can compare the effects of market volatilities on Great West 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 Great West with a short position of Brookfield Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and Brookfield Infrastructure.
Diversification Opportunities for Great West and Brookfield Infrastructure
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Great and Brookfield is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Great West Lifeco and Brookfield Infrastructure Part in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Infrastructure and Great West 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 Great West Lifeco 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 Great West i.e., Great West and Brookfield Infrastructure go up and down completely randomly.
Pair Corralation between Great West and Brookfield Infrastructure
Assuming the 90 days trading horizon Great West is expected to generate 1.15 times less return on investment than Brookfield Infrastructure. But when comparing it to its historical volatility, Great West Lifeco is 1.32 times less risky than Brookfield Infrastructure. It trades about 0.15 of its potential returns per unit of risk. Brookfield Infrastructure Partners is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,435 in Brookfield Infrastructure Partners on September 13, 2024 and sell it today you would earn a total of 50.00 from holding Brookfield Infrastructure Partners or generate 2.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great West Lifeco vs. Brookfield Infrastructure Part
Performance |
| Timeline |
| Great West Lifeco |
| Brookfield Infrastructure |
Great West and Brookfield Infrastructure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great West and Brookfield Infrastructure
The main advantage of trading using opposite Great West and Brookfield Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great West 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.| Great West vs. Northstar Clean Technologies | Great West vs. Western Investment | Great West vs. Economic Investment Trust | Great West vs. Storage Vault Canada |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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