Correlation Between Brookfield Business and FTAI Infrastructure

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

Diversification Opportunities for Brookfield Business and FTAI Infrastructure

-0.46
  Correlation Coefficient

Very good diversification

The 3 months correlation between Brookfield and FTAI is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Business Partners and FTAI Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAI Infrastructure and Brookfield Business 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 Business Partners are associated (or correlated) with FTAI Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTAI Infrastructure has no effect on the direction of Brookfield Business i.e., Brookfield Business and FTAI Infrastructure go up and down completely randomly.

Pair Corralation between Brookfield Business and FTAI Infrastructure

Considering the 90-day investment horizon Brookfield Business Partners is expected to under-perform the FTAI Infrastructure. But the stock apears to be less risky and, when comparing its historical volatility, Brookfield Business Partners is 1.48 times less risky than FTAI Infrastructure. The stock trades about -0.32 of its potential returns per unit of risk. The FTAI Infrastructure is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  610.00  in FTAI Infrastructure on January 23, 2024 and sell it today you would earn a total of  57.00  from holding FTAI Infrastructure or generate 9.34% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Brookfield Business Partners  vs.  FTAI Infrastructure

 Performance 
       Timeline  
Brookfield Business 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Brookfield Business Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental drivers remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
FTAI Infrastructure 

Risk-Adjusted Performance

22 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in FTAI Infrastructure are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating forward indicators, FTAI Infrastructure reported solid returns over the last few months and may actually be approaching a breakup point.

Brookfield Business and FTAI Infrastructure Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Brookfield Business and FTAI Infrastructure

The main advantage of trading using opposite Brookfield Business and FTAI Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Business position performs unexpectedly, FTAI 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 FTAI Infrastructure will offset losses from the drop in FTAI Infrastructure's long position.
The idea behind Brookfield Business Partners and FTAI Infrastructure 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.
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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