Correlation Between Brookfield Infrastructure and UNITIL

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

Diversification Opportunities for Brookfield Infrastructure and UNITIL

-0.02

Correlation Coefficient

Brookfield Infrastructure  UNITIL

Good diversification

The 3 months correlation between Brookfield and UNITIL is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Infrastructure Part and UNITIL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITIL 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 UNITIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITIL has no effect on the direction of Brookfield Infrastructure i.e., Brookfield Infrastructure and UNITIL go up and down completely randomly.

Pair Corralation between Brookfield Infrastructure and UNITIL

Considering the 90-day investment horizon Brookfield Infrastructure Partners is expected to generate 0.87 times more return on investment than UNITIL. However, Brookfield Infrastructure Partners is 1.15 times less risky than UNITIL. It trades about 0.09 of its potential returns per unit of risk. UNITIL is currently generating about 0.0 per unit of risk. If you would invest  3,215  in Brookfield Infrastructure Partners on August 30, 2024 and sell it today you would earn a total of  268.00  from holding Brookfield Infrastructure Partners or generate 8.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Brookfield Infrastructure Part  vs.  UNITIL

Brookfield Infrastructure

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Infrastructure Partners are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady forward indicators, Brookfield Infrastructure may actually be approaching a critical reversion point that can send shares even higher in December 2024.

UNITIL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNITIL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, UNITIL is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Brookfield Infrastructure and UNITIL

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

The idea behind Brookfield Infrastructure Partners and UNITIL 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.