Correlation Between IShares Canadian and Brookfield Infrastructure
Can any of the company-specific risk be diversified away by investing in both IShares Canadian 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 IShares Canadian and Brookfield Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Canadian HYBrid and Brookfield Infrastructure Partners, you can compare the effects of market volatilities on IShares Canadian 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 IShares Canadian with a short position of Brookfield Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and Brookfield Infrastructure.
Diversification Opportunities for IShares Canadian and Brookfield Infrastructure
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Brookfield is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and Brookfield Infrastructure Part in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Infrastructure and IShares Canadian 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 iShares Canadian HYBrid 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 IShares Canadian i.e., IShares Canadian and Brookfield Infrastructure go up and down completely randomly.
Pair Corralation between IShares Canadian and Brookfield Infrastructure
Assuming the 90 days trading horizon IShares Canadian is expected to generate 1.83 times less return on investment than Brookfield Infrastructure. But when comparing it to its historical volatility, iShares Canadian HYBrid is 2.82 times less risky than Brookfield Infrastructure. It trades about 0.18 of its potential returns per unit of risk. Brookfield Infrastructure Partners is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,768 in Brookfield Infrastructure Partners on September 14, 2024 and sell it today you would earn a total of 597.00 from holding Brookfield Infrastructure Partners or generate 33.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Canadian HYBrid vs. Brookfield Infrastructure Part
Performance |
| Timeline |
| iShares Canadian HYBrid |
| Brookfield Infrastructure |
IShares Canadian and Brookfield Infrastructure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and Brookfield Infrastructure
The main advantage of trading using opposite IShares Canadian and Brookfield Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian 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.| IShares Canadian vs. iShares Core Canadian | IShares Canadian vs. BMO Mid Corporate | IShares Canadian vs. Global X Active | IShares Canadian vs. iShares 1 10Yr Laddered |
| Brookfield Infrastructure vs. Canlan Ice Sports | Brookfield Infrastructure vs. Forsys Metals Corp | Brookfield Infrastructure vs. Metalero Mining Corp | Brookfield Infrastructure vs. Ramp Metals |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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