Correlation Between Ritchie Bros and Brookfield Infrastructure
Can any of the company-specific risk be diversified away by investing in both Ritchie Bros 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 Ritchie Bros and Brookfield Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ritchie Bros Auctioneers and Brookfield Infrastructure Partners, you can compare the effects of market volatilities on Ritchie Bros 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 Ritchie Bros with a short position of Brookfield Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ritchie Bros and Brookfield Infrastructure.
Diversification Opportunities for Ritchie Bros and Brookfield Infrastructure
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ritchie and Brookfield is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Ritchie Bros Auctioneers and Brookfield Infrastructure Part in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Infrastructure and Ritchie Bros 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 Ritchie Bros Auctioneers 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 Ritchie Bros i.e., Ritchie Bros and Brookfield Infrastructure go up and down completely randomly.
Pair Corralation between Ritchie Bros and Brookfield Infrastructure
Assuming the 90 days trading horizon Ritchie Bros Auctioneers is expected to generate 1.4 times more return on investment than Brookfield Infrastructure. However, Ritchie Bros is 1.4 times more volatile than Brookfield Infrastructure Partners. It trades about 0.23 of its potential returns per unit of risk. Brookfield Infrastructure Partners is currently generating about 0.13 per unit of risk. If you would invest 12,923 in Ritchie Bros Auctioneers on September 13, 2024 and sell it today you would earn a total of 669.00 from holding Ritchie Bros Auctioneers or generate 5.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ritchie Bros Auctioneers vs. Brookfield Infrastructure Part
Performance |
| Timeline |
| Ritchie Bros Auctioneers |
| Brookfield Infrastructure |
Ritchie Bros and Brookfield Infrastructure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ritchie Bros and Brookfield Infrastructure
The main advantage of trading using opposite Ritchie Bros and Brookfield Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ritchie Bros 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.| Ritchie Bros vs. Flow Beverage Corp | Ritchie Bros vs. iShares Canadian HYBrid | Ritchie Bros vs. Altagas Cum Red | Ritchie Bros vs. European Residential Real |
| Brookfield Infrastructure vs. UnitedHealth Group CDR | Brookfield Infrastructure vs. Aya Gold Silver | Brookfield Infrastructure vs. Canlan Ice Sports | Brookfield Infrastructure vs. Leveljump Healthcare Corp |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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