Correlation Between Pembina Pipeline and Brookfield Infrastructure
Can any of the company-specific risk be diversified away by investing in both Pembina Pipeline 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 Pembina Pipeline and Brookfield Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pembina Pipeline Corp and Brookfield Infrastructure Partners, you can compare the effects of market volatilities on Pembina Pipeline 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 Pembina Pipeline with a short position of Brookfield Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembina Pipeline and Brookfield Infrastructure.
Diversification Opportunities for Pembina Pipeline and Brookfield Infrastructure
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pembina and Brookfield is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and Brookfield Infrastructure Part in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Infrastructure and Pembina Pipeline 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 Pembina Pipeline Corp 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 Pembina Pipeline i.e., Pembina Pipeline and Brookfield Infrastructure go up and down completely randomly.
Pair Corralation between Pembina Pipeline and Brookfield Infrastructure
Assuming the 90 days trading horizon Pembina Pipeline is expected to generate 1.26 times less return on investment than Brookfield Infrastructure. But when comparing it to its historical volatility, Pembina Pipeline Corp is 1.13 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 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,653 in Brookfield Infrastructure Partners on September 4, 2024 and sell it today you would earn a total of 672.00 from holding Brookfield Infrastructure Partners or generate 40.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pembina Pipeline Corp vs. Brookfield Infrastructure Part
Performance |
| Timeline |
| Pembina Pipeline Corp |
| Brookfield Infrastructure |
Pembina Pipeline and Brookfield Infrastructure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pembina Pipeline and Brookfield Infrastructure
The main advantage of trading using opposite Pembina Pipeline and Brookfield Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline 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.| Pembina Pipeline vs. Laurentian Bank | Pembina Pipeline vs. US Financial 15 | Pembina Pipeline vs. Solid Impact Investments | Pembina Pipeline vs. Canadian Imperial Bank |
| Brookfield Infrastructure vs. Berkshire Hathaway CDR | Brookfield Infrastructure vs. Microsoft Corp CDR | Brookfield Infrastructure vs. Apple Inc CDR | Brookfield Infrastructure vs. Alphabet Inc CDR |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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