Correlation Between Visa and Brookfield Infrastructure
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Brookfield Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Brookfield Infrastructure Partners, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Brookfield Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Brookfield Infrastructure.
Diversification Opportunities for Visa and Brookfield Infrastructure
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and Brookfield is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Brookfield Infrastructure Part in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Infrastructure and Visa 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 Visa Class A 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 Visa i.e., Visa and Brookfield Infrastructure go up and down completely randomly.
Pair Corralation between Visa and Brookfield Infrastructure
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.24 times more return on investment than Brookfield Infrastructure. However, Visa is 1.24 times more volatile than Brookfield Infrastructure Partners. It trades about 0.14 of its potential returns per unit of risk. Brookfield Infrastructure Partners is currently generating about 0.16 per unit of risk. If you would invest 31,319 in Visa Class A on October 26, 2024 and sell it today you would earn a total of 1,690 from holding Visa Class A or generate 5.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Visa Class A vs. Brookfield Infrastructure Part
Performance |
| Timeline |
| Visa Class A |
| Brookfield Infrastructure |
Visa and Brookfield Infrastructure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Brookfield Infrastructure
The main advantage of trading using opposite Visa and Brookfield Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Brookfield Infrastructure vs. Toronto Dominion Bank | Brookfield Infrastructure vs. Laurentian Bank | Brookfield Infrastructure vs. Income Financial Trust | Brookfield Infrastructure vs. iA Financial |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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