Correlation Between Brookfield Infrastructure and WFD Unibail

Can any of the company-specific risk be diversified away by investing in both Brookfield Infrastructure and WFD Unibail 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 WFD Unibail 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 WFD Unibail Rodamco, you can compare the effects of market volatilities on Brookfield Infrastructure and WFD Unibail 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 WFD Unibail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Infrastructure and WFD Unibail.

Diversification Opportunities for Brookfield Infrastructure and WFD Unibail

0.74

Correlation Coefficient

Brookfield Infrastructure  WFD Unibail

Poor diversification

The 3 months correlation between Brookfield and WFD is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Infrastructure Part and WFD Unibail Rodamco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WFD Unibail Rodamco 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 WFD Unibail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WFD Unibail Rodamco has no effect on the direction of Brookfield Infrastructure i.e., Brookfield Infrastructure and WFD Unibail go up and down completely randomly.

Pair Corralation between Brookfield Infrastructure and WFD Unibail

Assuming the 90 days trading horizon Brookfield Infrastructure Partners is expected to generate 0.75 times more return on investment than WFD Unibail. However, Brookfield Infrastructure Partners is 1.33 times less risky than WFD Unibail. It trades about 0.07 of its potential returns per unit of risk. WFD Unibail Rodamco is currently generating about 0.02 per unit of risk. If you would invest  1,788  in Brookfield Infrastructure Partners on September 5, 2024 and sell it today you would earn a total of  96.00  from holding Brookfield Infrastructure Partners or generate 5.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Brookfield Infrastructure Part  vs.  WFD Unibail Rodamco

Brookfield Infrastructure

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Infrastructure Partners are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Brookfield Infrastructure is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

WFD Unibail Rodamco

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WFD Unibail Rodamco are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, WFD Unibail is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Brookfield Infrastructure and WFD Unibail

The main advantage of trading using opposite Brookfield Infrastructure and WFD Unibail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Infrastructure position performs unexpectedly, WFD Unibail 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 WFD Unibail will offset losses from the drop in WFD Unibail's long position.

The idea behind Brookfield Infrastructure Partners and WFD Unibail Rodamco 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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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.