Correlation Between Brookfield Infrastructure and International Business

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Can any of the company-specific risk be diversified away by investing in both Brookfield Infrastructure and International Business 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 Brookfield Infrastructure and International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookfield Infrastructure Partners and International Business Machines, you can compare the effects of market volatilities on Brookfield Infrastructure and International Business 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 Brookfield Infrastructure with a short position of International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Infrastructure and International Business.

Diversification Opportunities for Brookfield Infrastructure and International Business

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between Brookfield and International is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Infrastructure Part and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business and Brookfield Infrastructure 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 Brookfield Infrastructure Partners are associated (or correlated) with International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Brookfield Infrastructure i.e., Brookfield Infrastructure and International Business go up and down completely randomly.

Pair Corralation between Brookfield Infrastructure and International Business

Considering the 90-day investment horizon Brookfield Infrastructure is expected to generate 2.38 times less return on investment than International Business. In addition to that, Brookfield Infrastructure is 1.41 times more volatile than International Business Machines. It trades about 0.13 of its total potential returns per unit of risk. International Business Machines is currently generating about 0.43 per unit of volatility. If you would invest  13,318  in International Business Machines on August 28, 2022 and sell it today you would earn a total of  1,519  from holding International Business Machines or generate 11.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Brookfield Infrastructure Part  vs.  International Business Machine

 Performance (%) 
       Timeline  
Brookfield Infrastructure 
Brookfield Performance
0 of 100
Over the last 90 days Brookfield Infrastructure Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm insiders.

Brookfield Price Channel

International Business 
International Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively sluggish fundamental drivers, International Business revealed solid returns over the last few months and may actually be approaching a breakup point.

International Price Channel

Brookfield Infrastructure and International Business Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Brookfield Infrastructure and International Business

The main advantage of trading using opposite Brookfield Infrastructure and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Infrastructure position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.
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The idea behind Brookfield Infrastructure Partners and International Business Machines pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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