Correlation Between Consolidated Edison and Brookfield Infrastructure

Can any of the company-specific risk be diversified away by investing in both Consolidated Edison 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 Consolidated Edison and Brookfield Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Consolidated Edison and Brookfield Infrastructure Partners, you can compare the effects of market volatilities on Consolidated Edison 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 Consolidated Edison with a short position of Brookfield Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Edison and Brookfield Infrastructure.

Diversification Opportunities for Consolidated Edison and Brookfield Infrastructure

-0.54

Correlation Coefficient

Consolidated Edison  Brookfield Infrastructure

Excellent diversification

The 3 months correlation between Consolidated and Brookfield is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Edison and Brookfield Infrastructure Part in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Infrastructure and Consolidated Edison 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 Consolidated Edison 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 Consolidated Edison i.e., Consolidated Edison and Brookfield Infrastructure go up and down completely randomly.

Pair Corralation between Consolidated Edison and Brookfield Infrastructure

Allowing for the 90-day total investment horizon Consolidated Edison is expected to generate 1.39 times more return on investment than Brookfield Infrastructure. However, Consolidated Edison is 1.39 times more volatile than Brookfield Infrastructure Partners. It trades about 0.11 of its potential returns per unit of risk. Brookfield Infrastructure Partners is currently generating about -0.09 per unit of risk. If you would invest  9,495  in Consolidated Edison on February 20, 2025 and sell it today you would earn a total of  1,076  from holding Consolidated Edison or generate 11.33% return on investment over 90 days.

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

Consolidated Edison  vs.  Brookfield Infrastructure Part

Consolidated Edison

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Consolidated Edison are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting fundamental indicators, Consolidated Edison may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Brookfield Infrastructure

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brookfield Infrastructure Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Preferred Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Consolidated Edison and Brookfield Infrastructure

The main advantage of trading using opposite Consolidated Edison and Brookfield Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Edison 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.

The idea behind Consolidated Edison and Brookfield Infrastructure Partners 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.