Correlation Between Chatham Rock and Brookfield Infrastructure
Can any of the company-specific risk be diversified away by investing in both Chatham Rock 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 Chatham Rock and Brookfield Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chatham Rock Phosphate and Brookfield Infrastructure Partners, you can compare the effects of market volatilities on Chatham Rock 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 Chatham Rock with a short position of Brookfield Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chatham Rock and Brookfield Infrastructure.
Diversification Opportunities for Chatham Rock and Brookfield Infrastructure
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chatham and Brookfield is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Chatham Rock Phosphate and Brookfield Infrastructure Part in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Infrastructure and Chatham Rock 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 Chatham Rock Phosphate 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 Chatham Rock i.e., Chatham Rock and Brookfield Infrastructure go up and down completely randomly.
Pair Corralation between Chatham Rock and Brookfield Infrastructure
Assuming the 90 days horizon Chatham Rock Phosphate is expected to generate 19.69 times more return on investment than Brookfield Infrastructure. However, Chatham Rock is 19.69 times more volatile than Brookfield Infrastructure Partners. It trades about 0.04 of its potential returns per unit of risk. Brookfield Infrastructure Partners is currently generating about -0.12 per unit of risk. If you would invest 7.00 in Chatham Rock Phosphate on September 23, 2024 and sell it today you would lose (0.50) from holding Chatham Rock Phosphate or give up 7.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chatham Rock Phosphate vs. Brookfield Infrastructure Part
Performance |
| Timeline |
| Chatham Rock Phosphate |
| Brookfield Infrastructure |
Chatham Rock and Brookfield Infrastructure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chatham Rock and Brookfield Infrastructure
The main advantage of trading using opposite Chatham Rock and Brookfield Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chatham Rock 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.| Chatham Rock vs. Monarca Minerals | Chatham Rock vs. Outcrop Gold Corp | Chatham Rock vs. Grande Portage Resources | Chatham Rock vs. Klondike Silver Corp |
| Brookfield Infrastructure vs. Chatham Rock Phosphate | Brookfield Infrastructure vs. Elixxer | Brookfield Infrastructure vs. Cielo Waste Solutions | Brookfield Infrastructure vs. Blockmate Ventures |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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